Vistra (VST) 8-K Regulation FD Disclosure

Exhibit 99.1

Energy Harbor Corp. and Subsidiaries

Unaudited Condensed Consolidated Financial Statements

For the Quarterly Period Ended: September 30, 2023

TABLE OF CONTENTS

FINANCIAL STATEMENTS (Unaudited)	PAGE
Independent Accountant’s Review Report		1
Condensed Consolidated Statements of Income / (Loss) and Comprehensive Income (Loss)		2
Condensed Consolidated Balance Sheets		3
Condensed Consolidated Statements of Cash Flows		4
Condensed Consolidated Statements of Changes in Stockholders’ Equity		5
Notes to the Condensed Consolidated Financial Statements		6

INDEPENDENT ACCOUNTANT’S REVIEW REPORT

To the Board of Directors and Stockholders

of Energy Harbor Corp.

We have reviewed the accompanying interim condensed consolidated financial statements of Energy Harbor Corp. and subsidiaries (“the Company”) which comprise the condensed consolidated balance sheet as of September 30, 2023, and the related condensed consolidated statements of income / (loss) and comprehensive income / (loss), changes in stockholders’ equity, and cash flows for the nine months then ended, and the related notes to the condensed consolidated financial statements (collectively, the “financial statements”). A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the interim consolidated financial statements as a whole. Accordingly, we do not express such an opinion.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.

Accountant’s Responsibility

Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.

We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our review.

Accountant’s Conclusion

Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America.

Prior Period Presented

The financial statements of the Company for the nine months ended September 30, 2022, were not audited or reviewed and accordingly we do not express an opinion, a conclusion, nor provide any assurance on those financial statements.

Sterling Heights, Michigan

November 22, 2023

UHY-US.com  |  An independent member of UHY International

ENERGY HARBOR CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME / (LOSS) AND COMPREHENSIVE INCOME / (LOSS)

(Unaudited) (amounts in millions)

	Three Months Ended September 30						Nine Months Ended September 30
	2023			2022			2023			2022
STATEMENTS OF INCOME / (LOSS)
Revenues	$	744		$	367		$	1,961		$	1,183
Operating costs
Fuel and purchased power		303			(76	)		721			129
Depreciation and amortization		22			24			64			72
Other operating costs		189			265			1,013			742
Operating income		230			154			163			240
Other income / (expense)
Nuclear decommissioning trust results		(48	)		(34	)		57			(255	)
Other income / (expense), net		7			1			24			(12	)
Interest expense		(7	)		(14	)		(23	)		(26	)
Income/ (loss) from continuing operations before taxes		182			107			221			(53	)
Income tax expense / (benefit)		41			15			51			(7	)
Net income / (loss) from continuing operations		141			92			170			(46	)
(Loss) / income from discontinued operations		(103	)		(9	)		(171	)		70
Net income / (loss)	$	38		$	83		$	(1	)	$	24
STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)
Net income / (loss) from continuing operations	$	38		$	83		$	(1	)	$	24
Comprehensive income / (loss)	$	38		$	83		$	(1	)	$	24

See notes to the Condensed Consolidated Financial Statements.

2

ENERGY HARBOR CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited) (amounts in millions)

	September 30, 2023			December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	803		$	816
Receivables, net		263			237
Materials and supplies inventory		245			257
Derivatives		175			614
Prepayments and other		82			42
Current assets of discontinued operations		2			59
		1,570			2,025
PROPERTY, PLANT AND EQUIPMENT, NET		1,166			1,168
NUCLEAR PLANT DECOMMISSIONING TRUSTS		1,865			1,808
DEFERRED CHARGES AND OTHER ASSETS
Derivatives		42			162
Other		19			39
Non-current assets of discontinued operations		50			62
		111			263
TOTAL ASSETS	$	4,712		$	5,263
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	53		$	106
Derivatives		223			561
Other		132			193
Current liabilities of discontinued operations		4			44
		412			904
NON-CURRENT LIABILITIES
Asset retirement obligations		1,924			1,897
Long term debt		431			431
Other noncurrent liabilities		194			279
Non-current liabilities of discontinued operations		—			15
		2,549			2,622
TOTAL LIABILITIES		2,961			3,526
STOCKHOLDERS’ EQUITY
Common stock, preferred stock and additional-paid-in-capital		2,041			2,026
Cost of shares held in treasury		(683	)		(683	)
Accumulated other comprehensive income		13			13
Retained earnings		380			381
		1,751			1,737
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	4,712		$	5,263

See notes to the Condensed Consolidated Financial Statements.

3

ENERGY HARBOR CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (amounts in millions)

	Nine Months Ended September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) / income	$	(1	)	$	24
Adjustments to reconcile net income / (loss) to cash used for operating activities:
Depreciation, amortization and asset retirement obligation accretion (1)		169			147
Loss / (gain) on decommissioned / sold assets (2)		149			(55	)
Deferred income taxes		—			4
Provision for bad debts		2			—
Unrealized loss / (gain) on derivative transactions		95			(43	)
Net results on nuclear decommissioning trust investments		(57	)		255
Changes in current assets and liabilities:
Receivables, net		(27	)		(42	)
Materials and supplies inventory		40			(36	)
Prepayments and other current assets		17			(1	)
Accounts payable		(80	)		2
Collateral		(39	)		(59	)
Other current liabilities and accruals		(53	)		(83	)
Other deferred charges and assets		33			16
Cash provided from operating activities		248			129
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (3)		(81	)		(77	)
Proceeds from the sale of fossil assets		22			—
Disbursements from the sale of fossil assets		(144	)		—
Nuclear fuel purchases		(58	)		(99	)
Purchases of securities in nuclear decommissioning trust		(445	)		(935	)
Sale of securities in nuclear decommissioning trust		445			935
Cash used for investing activities		(261	)		(176	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of remarketed debt		—			561
Repayment of debt		—			(561	)
Cash provided from financing activities		—			—
Net change in cash and cash equivalents		(13	)		(47	)
Cash and cash equivalents at beginning of the period		816			1,063
Cash and cash equivalents at end of period	$	803		$	1,016
SUPPLEMENTAL DISCLOSURE OF CASH INFORMATION
Cash paid for:
Interest	$	12		$	10

(1) Depreciation, amortization and asset retirement obligation accretion attributable to discontinued operations is $31 and $4 for the nine months ended September 30, 2023 and 2022, respectively.

(2) Loss / (gain) on decommissioned / sold assets attributable to discontinued operations is $149 and $(55) for the nine months ended September 30, 2023 and 2022, respectively.

(3) Capital expenditures attributable to discontinued operations is zero and $10 for the nine months ended September 30, 2023 and 2022, respectively.

See notes to the Condensed Consolidated Financial Statements.

4

ENERGY HARBOR CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY

(Unaudited)

(amounts in millions, except number of shares data)

	Preferred Stock				Common Stock				APIC		Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
	Number of Shares		Par Value		Number of Shares		Par Value
Balance at December 31, 2021		1,987		—		80,725,234	$	1	$	1,998	$	(683	)	$	(8	)	$	488		$	1,796
Net loss		—		—		—		—		—		—			—			24			24
Stock based compensation		—		—		548,175		—		16		—			—			—			16
Balance at September 30, 2022		1,987		—		81,273,409	$	1	$	2,014	$	(683	)	$	(8	)	$	512		$	1,836
Net loss		—		—		—		—		—		—			—			(131	)		(131	)
Effects related to pension obligations		—		—		—		—		—		—			21			—			21
Stock based compensation		485		—		338,447		—		12		—			—			—			12
Balance at December 31, 2022		2,472		—		81,611,856	$	1	$	2,026	$	(683	)	$	13		$	381		$	1,737
Net loss		—		—		—		—		—		—			—			(1	)		(1	)
Stock based compensation		—		—		4,416		—		15		—			—			—			15
Balance at September 30, 2023		2,472		—		81,616,272	$	1	$	2,041	$	(683	)	$	13		$	380		$	1,751

See notes to the Condensed Consolidated Financial Statements.

5

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

1. Business, Basis of Presentation and Summary of Accounting Policies

Description of Business

Energy Harbor Corp. (and its consolidated subsidiaries, except as the context may otherwise require, “Energy Harbor,” “we,” “our,” “us,” “EH” or “the Company”) is a privately held energy producer and retailer, headquartered in Akron, Ohio. We serve nearly one million residential, commercial and industrial customers and operate a fleet of nuclear fuel generators in Ohio and Pennsylvania.

The Company conducts all of its wholesale generation business in the PJM Regional Transmission Organization (“RTO”), which includes Ohio, Pennsylvania, and West Virginia, along with a number of other states, and conducts retail operations in those states as well as other states within PJM Interconnection L.L.C. (“PJM”) and the Midcontinent Independent System Operator, Inc. RTO (“MISO”). Through its subsidiaries, Energy Harbor participates in both the generation wholesale and retail markets by selling power and providing energy-related products in the PJM and MISO regions. Our retail business operates through Energy Harbor, LLC (“EH LLC”), which supplies electricity and natural gas to end-use customers through retail arrangements, including retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Michigan, New Jersey and Maryland, and the provision of partial provider of last resort and default service for various utilities in Ohio, Pennsylvania and Maryland.

Discontinued Operations

A component of an entity that is disposed of by sale or abandonment is reported as discontinued operations if the transaction represents a strategic shift that will have a major effect on an entity’s operations and financial results. The results of discontinued operations are aggregated and presented separately in the Consolidated Statement of Income (Loss). Assets and liabilities of the discontinued operations are aggregated and reported separately as assets and liabilities of discontinued operations in the Consolidated Balance Sheet, including the comparative prior year period. The Company is presenting the Consolidated Statements of Cash Flows at the consolidated level with additional required disclosures related to the discontinued operations in the footnotes to the Statement. Amounts presented in discontinued operations have been derived from our consolidated financial statements and accounting records using the historical basis of assets, liabilities, and historical results of Energy Harbor.

Refer to Note 2, Discontinued Operations, for additional information.

Strategic Transaction

On March 6, 2023, Vistra Operations Company LLC, a Delaware limited liability company (“Parent”) and a wholly owned indirect subsidiary of Vistra Corp. (“Vistra”), and Black Pen Inc., a Delaware corporation and a wholly owned indirect subsidiary of Parent (“Merger Sub”), executed a definitive agreement with the Company (the “Transaction Agreement”), pursuant to which the Company will merge with and into Merger Sub, with the Company continuing as the surviving corporation. The Transaction Agreement has been approved by the Company’s board of directors and stockholders. The transaction is subject to various conditions, including, among others, receipt of all requisite regulatory approvals, which includes approvals by the Nuclear Regulatory Commission (“NRC”) and the Federal Energy Regulatory Commission (“FERC”), and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino

6

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Antitrust Improvements Act of 1976 (the “HSR Act”). On May 22, 2023, each of the Company and Vistra received a request for additional information and documentary material (commonly known as a “second request”) from the Department of Justice (the “DOJ”) in connection with the proposed transaction. Issuance of the second request extends the waiting period under the HSR Act until 30 days after the Company and Vistra have substantially complied with the second request, unless that period is extended voluntarily by the parties or otherwise terminated by the DOJ. The Company and Vistra continue to work cooperatively with the DOJ staff in its review of the proposed transaction. On August 17, 2023, FERC issued a letter requesting additional information from the Company and Vistra regarding the proposed transaction. On September 18, 2023, the Company and Vistra submitted the requested materials to FERC. Subsequently, on October 13, 2023, FERC issued an order tolling the time for action on the application until April 11, 2024. On September 28, 2023, the NRC approved the license transfers associated with the transaction. The Company and Vistra continue to expect to complete the transaction in the fourth quarter of 2023, subject to the FERC approval and satisfaction or permitted waiver of the conditions to closing.

Basis of Presentation

The consolidated financial statements (the “financial statements”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All intercompany items and transactions have been eliminated in consolidation. All dollar amounts in the consolidated financial statements as well as tables in the notes thereto are stated in millions of U.S. dollars unless otherwise indicated.

These interim financial statements have been prepared pursuant to GAAP for interim reporting. Certain information and disclosures normally included in financial statements and notes prepared in accordance with GAAP have been condensed or omitted pursuant to such rules. These interim financial statements should be read in conjunction with the financial statements and notes included in the Company’s annual financial statements for the year ended December 31, 2022.

Prior Period Financial Information

In the second quarter of 2022, the Company updated its financial statement presentation to reclassify a portion of settled derivative transactions from revenue to purchased power on the statement of income (loss) to better represent the economics of the transactions. Prior periods have been updated to conform to the current presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The reported results of operations are not necessarily indicative of results of operations for any future period. We have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

7

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in banks, and temporary investments purchased with remaining maturities of three months or less. The Company maintains cash in bank accounts that may exceed the Federal Deposit Insurance Corporation (“FDIC”) limits and recognizes that this is a normal business risk.

Credit Losses

Trade receivables are reported in the balance sheet net of an allowance for credit losses. The Company accrues an allowance for current expected credit losses based on estimates of uncollectible revenues by analyzing accounts receivable aging, historical collections and delinquencies, and other customer and economic factors, as appropriate.

The following table, which is presented in thousands versus millions, provides activity in the allowance for credit losses account for the three and nine months ended September 30, 2023 and September 30, 2022.

	Three Months Ended						Nine Months Ended
(In thousands)	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Balance at beginning of period	$	1,579		$	1,797		$	1,893		$	1,381
Provision for credit losses		545			800			1,774			1,861
Write-offs		(705	)		(991	)		(2,320	)		(1,730	)
Recoveries		70			15			142			109
Balance at end of period	$	1,489		$	1,621		$	1,489		$	1,621

Materials and Supplies Inventory

Materials and supplies inventory includes fuel inventory and generation plant materials, net of reserve for excess and obsolete inventory. Materials are generally charged to inventory at weighted average cost when purchased and expensed or capitalized, as appropriate, when used or installed. Fuel stock and natural gas in storage are generally reported at the lower of cost when purchased (calculated on a weighted average basis) or net realizable value and recorded to fuel expense when consumed.

Refer to Note 11, Supplemental Financial Information, for more information.

Nuclear Fuel

Nuclear fuel is capitalized and reported as a component of our property, plant and equipment in our consolidated balance sheets. Amortization of nuclear fuel is calculated on the units-of-production method and is reported as a component of fuel and purchased power costs in our consolidated statements of loss and comprehensive loss.

Property, Plant and Equipment

Property, plant and equipment reflects original cost, including payroll and related costs such as taxes, employee benefits, administrative and general costs, and interest costs incurred to place the assets in service. The costs of normal maintenance, repairs and minor replacements are expensed as incurred. Energy Harbor recognizes liabilities for planned major maintenance projects as they are incurred.

8

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Depreciation of our property, plant and equipment (except for nuclear fuel) is calculated on a straight-line basis over the estimated lives based on management’s estimates of the assets’ economic useful lives.

Refer to Note 11, Supplemental Financial Information, for more information.

Investments

All temporary cash investments purchased with an initial maturity of three months or less are reported as cash equivalents on the consolidated balance sheets at cost, which approximates their fair market value.

Investments other than cash and cash equivalents include equity securities and available-for-sale (“AFS”) debt securities held within the Nuclear Decommissioning Trust (“NDT”). Energy Harbor has no debt securities held for trading purposes.

For AFS debt securities, unrealized gains are recognized in accumulated other comprehensive income (“AOCI”) and losses are recognized in AOCI to the extent there are sufficient unrealized gains to absorb the loss. Otherwise, unrealized losses on AFS debt securities are recognized in income.

Revenue Recognition

The Company accounts for revenues from contracts with customers under ASC 606, “Revenue from Contracts with Customers.” Other non-customer revenues are derived from byproducts and derivative financial instruments and are not revenues from contracts with customers; such revenues are accounted for under other applicable U.S. GAAP guidance.

Derivative Financial Instruments and Mark-to-Market Accounting

Energy Harbor is exposed to financial risks resulting from fluctuating interest rates and commodity prices, including prices for electricity, natural gas, coal and energy delivery. To manage the volatility related to these exposures, Energy Harbor’s senior management has designed and implemented risk management programs and oversees compliance with corporate risk management policies and established risk management practice.

The Company uses a variety of derivative instruments to manage commodity price risk. If the instrument meets the definition of a derivative under accounting standards related to derivative instruments and hedging activities, changes in the fair value of the derivative are recognized in net income as unrealized gains and losses. This recognition is referred to as mark-to-market accounting. Accounting standards related to derivative instruments and hedging activities allow for normal purchase and sale elections and hedge accounting designations, which generally eliminate or defer the requirement for mark-to-market recognition in net income and thus reduce the volatility of net income that can result from fluctuations in fair values. Normal purchases and sales are contracts that provide for physical delivery of quantities expected to be used or sold over a reasonable period in the normal course of business and are not subject to mark-to-market accounting if the normal purchase or sale election is made; the normal purchase and normal sales exemption was elected for certain instruments. Accounting standards also permit an entity to designate certain qualifying derivative contracts in a hedge accounting relationship, whereby changes in fair value are not recognized immediately in earnings. Energy Harbor does not have derivative instruments with hedge accounting designations.

9

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Refer to Note 6, Fair Value Measurements, for additional information on the Company’s valuation techniques.

The fair values of our unsettled derivative instruments under mark-to-market accounting are reported in the consolidated balance sheets as derivative contractual assets or liabilities. We report derivative assets and liabilities in the consolidated balance sheet without taking into consideration netting arrangements we have with counterparties. When derivative instruments are settled and realized gains and losses are recorded, the previously recorded unrealized gains and losses and derivative assets and liabilities are reversed. Unrealized gains and losses arising from changes in the fair value of these derivative instruments, as well as realized gains and losses upon settlement of the instruments, are reported in the consolidated statements of loss and comprehensive loss in revenues, purchased power costs and other operating costs.

Refer to Note 8, Derivative Instruments, for additional information.

Fair Value Measurements

The carrying amount of cash and cash equivalents, receivables, accounts payable, and accrued liabilities approximate fair value because of the short-term maturity of these instruments. Other balance sheet accounts are carried at fair value based on the fair value techniques associated with those instruments. The fair values of long-term obligations reflect the present value of the cash outflows relating to those securities based on the current call price, the yield to maturity or the yield to call, as deemed appropriate at the end of each respective period. The yields assumed were based on securities with similar characteristics offered by corporations with credit ratings similar to those of Energy Harbor and the difference between carrying value and fair value is not material.

See Note 6, Fair Value Measurements, for a further discussion of fair value of financial instruments.

Asset Retirement Obligations

Energy Harbor recognizes an Asset Retirement Obligation (“ARO”) for the future decommissioning of its nuclear power plants and future remediation of other environmental liabilities associated with certain of its long-lived assets. The ARO liability represents an estimate of the fair value of Energy Harbor’s current obligation related to nuclear decommissioning and the retirement or remediation of environmental liabilities of other assets. A fair value measurement inherently involves uncertainty in the amount and timing of settlement of the liability. Energy Harbor uses an expected cash flow approach to measure the fair value of the nuclear decommissioning and environmental remediation ARO, considering the expected timing of settlement of the ARO based on the expected economic useful life of the plants, including the likelihood that the facilities will be deactivated before the end of their estimated useful lives. The fair value of an ARO is recognized in the period in which it is incurred. Over time, the liability is accreted for the change in present value.

10

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Refer to Note 11, Supplemental Financial Information, for additional information.

Leases

The Company applies the guidance in ASC 842 to individual leases of assets. The Company determines whether an arrangement is a lease at contract inception by determining if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

The Company’s classes of assets include real estate and equipment. All leased assets have been classified as operating and finance lease arrangements.

Operating and Finance lease balances are included in lease right-of-use (“ROU”) assets (Operating and Finance), other current liabilities, and lease liabilities (Operating and Finance) in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any prepaid lease payments made, less lease incentives. The ROU asset is subject to testing for impairment if there is an indicator for impairment, as is the case for owned assets. The amortization of operating lease ROU assets and the accretion of operating lease liabilities are reported together as fixed lease expense. The fixed lease expense is recognized on a straight-line basis over the life of the lease.

The Company’s lease terms include the impact of options to extend or terminate the lease when it is reasonably certain that the options will be exercised or not exercised, as appropriate.

When the rate implicit in the lease is not readily determinable, a lessee that is not a public business entity is permitted to use a risk-free discount rate, instead of its incremental borrowing rate, as an accounting policy election by class of underlying asset. The risk-free rate is determined using a period comparable to that of lease term. Energy Harbor has elected to use risk-free rate (US Treasury rate) as an input to IBR rate.

The Company has elected the practical expedient within ASC 842 not to combine separate lease and non-lease components within lease transactions for all classes of assets. Additionally, the Company has elected the short-term lease exception for all classes of assets and does not apply the recognition requirements in ASC 842 for leases of 12 months or less and recognizes lease payments for short term leases as expense either straight-line over the lease term or as incurred, depending on whether the lease payments are fixed or variable.

Refer to Note 5, Leases, for additional information.

2. Discontinued Operations

On March 14, 2022, the Company announced its plan to become a 100% carbon free, energy infrastructure company in 2023 with the exit of the fossil business through a sale or deactivation of its fossil power stations as well as the divestiture of other non-core ancillary properties relating to its fossil business. On October 7, 2022, the Company approved a plan to divest its Pleasants and Sammis power facilities and the Hollow Rock landfill. The Sammis power facility was deactivated in the second quarter of 2023 which resulted in the classification of the Fossil assets as held for sale. This required the Company to report Fossil operations as discontinued operations in the period.

11

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

The sale of the Pleasants facility closed on December 29, 2022, but the Company continued to operate the plant under a lease back with the buyer. On August 1, 2023, the Company completed a transaction pursuant to which ownership of the Pleasants facility was transferred to a new buyer and the lease back of the facility was terminated in connection with the completion of such transaction. As a result of the transfer, the Company received proceeds of $21.5 from the buyer.

The Company closed on the Sammis, Hollow Rock landfill, and additionally, the Eastlake plant, sale on September 8, 2023. As a result of the sale, there was a net cash disbursement of $130.6 related to disposals of various property, plant and equipment with a net loss of $144.7.

The fossil fuel business’s operating results are reflected as discontinued operations in the Consolidated Statements of Income for all periods presented. The major line items constituting the income/ (loss) from discontinued operations, net of tax are as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2023			2022			2023			2022
STATEMENTS OF INCOME / (LOSS)
Revenues	$	1		$	114		$	158		$	388
Operating costs
Fuel and purchased power		2			85			102			246
Depreciation and amortization		—			3			31			9
Other operating costs		13			36			89			110
Operating (loss) / income		(14	)		(10	)		(64	)		23
Other income / (expense)
Other (expense) / income, net		(119	)		—			(158	)		57
(Loss) / income from discontinued operations before taxes		(133	)		(10	)		(222	)		80
Income tax (benefit) / expense		(30	)		(1	)		(51	)		10
Net (loss) / income from discontinued operations, net of tax	($	103	)	($	9	)	($	171	)	$	70

12

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

The Fossil Fuel Business’ assets and liabilities are reflected as assets and liabilities of discontinued operations in the Company’s Consolidated Balance Sheets for all periods presented. The major classes of assets and liabilities included as part of discontinued operations are as follows:

	September 30, 2023		December 31, 2022
ASSETS
CURRENT ASSETS
Receivables, net	$	2	$	2
Materials and supplies inventory		—		40
Prepayments and other		—		17
Current assets of discontinued operations		2		59
NON-CURRENT ASSETS
Property, plant, and equipment, net		—		61
Other		50		1
Non-current assets of discontinued operations		50		62
TOTAL ASSETS	$	52	$	121
LIABILITIES
CURRENT LIABILITIES
Accounts payable		—	$	26
Other		4		18
Current liabilities of discontinued operations		4		44
NON-CURRENT LIABILITIES
Asset retirement obligations		—		13
Other noncurrent liabilities		—		2
Non-current liabilities of discontinued operations		—		15
TOTAL LIABILITIES	$	4	$	59

3. Capitalization

Equity

Common Stock

As of September 30, 2023, there were 500 million shares of common stock authorized for issuance, each with a par value of $0.001 per share. There were approximately 81.9 million shares issued and outstanding as of September 30, 2023 and December 31, 2022. All shares of common stock have the same voting rights.

13

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

The Company has paid no dividends for the nine months ended September 30, 2023 and September 30, 2022.

Preferred Stock

In connection with the emergence from bankruptcy, the Company issued to certain employees approximately 3,000 shares (in the aggregate) of Series A preferred stock and Series B preferred stock, each with a par value of $0.001 per share. Each share of preferred stock is subject to vesting based upon time and equity return thresholds and vested shares are redeemable and convertible under certain circumstances, with each vested share being currently convertible into 1,000 shares of Company common stock. As of September 30, 2023, and December 31, 2022, approximately 2,470 shares of such preferred stock were vested in accordance with their terms.

Treasury Stock

The Board of Directors of the Company previously authorized management to repurchase up to $800 of the Company’s outstanding common stock in a program that ended late 2020. As of September 30, 2023, and 2022, approximately 20.4 million shares had been repurchased at a total cost of $683 pursuant to the authorization.

Accumulated Other Comprehensive Income

As of September 30, 2023, and December 31, 2022, the effects related to pension assets and obligations recognized in accumulated other comprehensive income were $13. For the nine months ended September 30, 2023 and 2022, amounts recognized in other comprehensive income related to the amortization of prior service costs were nominal.

Debt

As of September 30, 2023, and December 31, 2022, the Company had the following outstanding debt:

	Interest Rate			September 30, 2023		December 31, 2022
Energy Harbor Generation LLC (EHG) secured notes		3.375	%	$	100	$	100
		3.750	%		46		46
Energy Harbor Nuclear Generation LLC (EHNG) secured notes		4.750	%		285		285
Total value of oustanding secured notes				$	431	$	431

Interest on EHG and EHNG notes is paid semi-annually with the specific dates depending on the debt issuance.

The EHG and EHNG notes are secured by first mortgage bonds issued by EHG and EHNG, as applicable, which are in turn secured by a first lien security interest on substantially all of the applicable operating subsidiaries’ property, plant, and equipment used in the generation and production of electricity. Energy Harbor Corp., the holding company, has provided an unsecured guarantee of the secured notes. These secured notes are considered long-term in nature and are presented as long-term debt on the consolidated balance sheets. Maturity dates extend to 2047.

14

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

4. Revenues

The following table represents a disaggregation of revenue from contracts with customers by type of service for the three and nine months ended September 30, 2023 and September 30, 2022:

	Three Months Ended					Nine Months Ended
	September 30, 2023		September 30, 2022			September 30, 2023		September 30, 2022
Contract sales	$	681	$	489		$	1,655	$	1,562
Wholesale sales		31		121			22		98
Financially settled sales		20		(268	)		232		(515	)
Transmission sales		10		25			48		38
Total customer revenues		742		367			1,957		1,183
Other non-customer revenues		2		—			4		—
Total revenues	$	744	$	367		$	1,961	$	1,183

Energy Harbor primarily provides energy and energy related services, including the generation and sale of electricity through retail and wholesale competitive supply arrangements. Contract sales consist of competitive sales to large commercial and industrial customers, products delivered to electric distribution companies to provide to their end-use non-shopping customers, governmental aggregation sales, municipality sales, bilateral sales, mass market and sales to small commercial and industrial customers. Wholesale sales consist of generation and capacity sales solely to PJM. Financially settled sales with third parties are sell side hedging transactions settled in the period. Transmission sales are derived from ancillary services, which help balance the transmission system. Other non-customer revenues are derived from byproducts and derivatives and are not revenues from contracts with customers and are accounted for under other applicable U.S. GAAP guidance.

Electricity revenues are recognized over time as power is delivered to the customer, and the customers consume the electricity immediately as delivery occurs. Capacity revenues resulting from plants standing ready to produce electricity are recognized ratably over the PJM planning year at prices cleared in the annual base residual auction and incremental auctions.

The power produced at our generation plants is sold into the PJM market and we may also purchase power from PJM and other RTOs to supplement power supplied to customers. Sales of energy into the PJM spot market (wholesale sales) are accounted for as we deliver energy into the market, at which point pricing and quantities are known. Generally, these power sales from generation and purchases to serve load are netted hourly and reported as either revenues or purchased power on the consolidated statements of loss and comprehensive loss, based on whether Energy Harbor was a net seller or buyer each hour. Capacity purchases and sales through PJM Reliability Pricing Model base residual auctions are reported within revenues on the consolidated statements of loss and comprehensive loss. Certain capacity income (bonuses) and charges (penalties) related to the availability of units that have cleared in auctions are unknown and not recorded in revenue until the over or under performance of the units occurs and such bonuses or penalties are realized.

15

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

The majority of Energy Harbor’s contract sales are full requirements contracts in that the quantity of energy purchased is not stipulated in the contract but based on the needs of the customer. The volume variability within these types of contracts is resolved and accounted for as purchased power (netted with wholesale sales) that is triggered as the customer uses power. Energy Harbor may have contract sales that include energy as well as other services such as renewable energy requested by the customer, ancillary services and/or capacity. We have analyzed these contracts and determined, with the exception of energy sales that include renewable power, that these contracts do not have multiple performance obligations that are capable of being distinct within the context of the contract and therefore are not separable. Providing renewable power to customers occurs over time in conjunction with the delivery of electricity resulting in no difference in the timing of revenue recognition.

Energy Harbor follows the accrual method of accounting for revenues, recognizing revenue for electricity that has been delivered to customers but not yet billed through the end of the accounting period. The determination of electricity sales to individual customers is based on meter readings, which occur on a systematic basis throughout each month. At the end of each month, electricity delivered to customers since the last meter reading is estimated and a corresponding accrual for unbilled sales is recognized. The determination of unbilled sales and revenues requires management to make estimates regarding electricity available for retail load, demand by customer class, applicable billing demands, weather-related impacts, number of days unbilled and tariff rates in effect within each customer class. Customer payments are generally due within 30 days.

5. Leases

Reconciliation to statement of financial position

Supplemental statement of financial position information related to leases as of September 30, 2023 and December 31, 2022 are as follows:

	September 30, 2023		December 31, 2022
Right-of-use asset
Operating	$	8	$	10
Total right-of-use assets	$	8	$	10
Lease liability
Operating lease
Current	$	2	$	2
Non-current		6		8
Total lease liabilities	$	9	$	10

16

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Lease cost and reconciliation to income statement

Lease costs incurred by lease type, and/or type of payment for the three and nine months ended September 30, 2023 and September 30, 2022 are as follows:

	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Lease cost
Operating lease cost	$	1		—	$	1	$	1
Short-term lease cost		—		1		4		2
Total lease cost	$	1	$	1	$	5	$	3

Other supplemental lease disclosures

Other supplemental quantitative disclosures as of September 30, 2023 and December 31, 2022 are as follows:

	September 30, 2023			December 31, 2022
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	1		$	2
Right-of-use assets obtained in exchange for new operating lease liabilities		8			10
Weighted-average remaining lease term:
Operating leases		8			8
Weighted-average discount rate:
Finance leases		0.0	%		6.7	%
Operating leases		0.4	%		0.4	%

6. Fair Value Measurements

Certain assets and liabilities are required to be presented at fair value on the consolidated balance sheets. The Company uses several valuation techniques to measure the fair value of assets and liabilities required to be presented at fair value. We categorize our assets and liabilities recorded at fair value using the following fair value hierarchy:

Level 1 valuations use quoted prices for identical instruments in active markets.

Level 2 valuations use quoted prices for similar instruments in active markets and markets that are not active, as well as model-derived valuations using inputs from observable market data.

Level 3 valuations use unobservable inputs, which are only used to the extent observable inputs are unavailable. In these situations, little, if any, market activity for the asset or liability is available, requiring management to utilize the most relevant market information available as well as internally developed inputs and methods. As of September 30, 2023, and December 31, 2022, there were no assets or liabilities recorded at fair value using Level 3 valuation techniques.

17

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Authoritative accounting guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy gives the highest priority to Level 1 measurements and the lowest priority to Level 3 measurements.

Energy Harbor primarily applies the market approach for recurring fair value measurements using the best information available. Accordingly, Energy Harbor maximizes the use of observable inputs and minimizes the use of unobservable inputs. The determination of the fair value measures takes into consideration various factors, including but not limited to, nonperformance risk, counterparty credit risk and the impact of credit enhancements (such as cash deposits, letter of credit and priority interests). The impact of these forms of risk was not significant to the fair value measurements.

The following tables set forth the recurring assets and liabilities that are accounted for at fair value by level within the fair value hierarchy as of September 30, 2023 and December 31, 2022, respectively:

	September 30, 2023
	Level 1			Level 2			Level 3		Total
Assets
Nuclear decommissioning trusts:
Short-term cash investments	$	75			—			—	$	75
Equity securities (1)		633			—			—		633
Corporate debt securities		—		$	865			—		865
Foreign government debt securities		—			39			—		39
U.S. government debt securities		—			210			—		210
U.S. state debt securities		—			13			—		13
Mortgage-backed securities		—			15			—		15
Derivative assets – commodity contracts		—			217			—		217
Other (2)		733			—			—		733
Total assets		1,441			1,359			—		2,800
Liabilities
Derivative liabilities – commodity contracts		—			(256	)		—		(256	)
Total liabilities		—			(256	)		—		(256	)
Net assets (3)	$	1,441		$	1,103			—	$	2,544
			��

(1) NDT funds hold equity portfolios whose performance is benchmarked against the S&P 500 Low Volatility High Dividend Index, S&P 500 Index, MSCI World Index and MSCI AC World IMI Index.

(2) Primarily consists of short-term cash investments.

(3) Excludes $30 of income tax receivable and ($15) of other receivables, payables, and accrued income associated with financial instruments reflected within the fair value table.

18

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

	December 31, 2022
	Level 1		Level 2			Level 3		Total
Assets
Nuclear decommissioning trusts:
Short-term cash investments	$	80		—			—	$	80
Equity securities (1)		560		—			—		560
Corporate debt securities		—	$	848			—		848
Foreign government debt securities		—		39			—		39
U.S. government debt securities		—		202			—		202
U.S. state debt securities		—		14			—		14
Mortgage-backed securities		—		14			—		14
Derivative assets – commodity contracts		—		776			—		776
Other (2)		764		—			—		764
Total assets		1,404		1,893			—		3,297
Liabilities
Derivative liabilities – commodity contracts		—		(722	)		—		(722	)
Total liabilities		—		(722	)		—		(722	)
Net assets (3)	$	1,404	$	1,171			—	$	2,575

(1) NDT funds hold equity portfolios whose performance is benchmarked against the Standard & Poor’s Rating Service (“S&P”) 500 Low Volatility High Dividend Index, S&P 500 Index, MSCI World Index and MSCI AC World IMI Index.

(2) Primarily consists of short-term cash investments.

(3) Excludes $53 of income tax receivable ($2) of receivables, payables, taxes and accrued income associated with investments reflected within the fair value table

The following table summarizes the amortized cost basis, unrealized gains, unrealized losses, and fair values of investments held in NDTs as of September 30, 2023 and December 31, 2022, respectively. For available-for-sale (“AFS”) debt securities, unrealized gains are recognized in AOCI, and losses are recognized in AOCI to the extent there are sufficient unrealized gains to absorb the loss. Otherwise, unrealized losses on AFS debt securities are recognized in income:

	September 30, 2023
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Equity securities	$	515	$	118		—		$	633
Debt securities	$	1,146	$	10	$	(14	)	$	1,142
	December 31, 2022
	Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
Equity securities	$	508	$	62	$	(10	)	$	560
Debt securities	$	1,113	$	15	$	(11	)	$	1,117

19

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Proceeds from the sale of investments in equity and AFS debt securities, realized gains and losses on those sales, other-than-temporary-impairment (“OTTI”) and interest and dividend income for the three and nine months ended September 30, 2023 and September 30, 2022 were as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Sale proceeds	$	216		$	589		$	445		$	926
Realized gains	$	8		$	18		$	34		$	39
Realized losses	$	(7	)	$	(84	)	$	(31	)	$	(161	)
OTTI	$	(14	)	$	(49	)	$	(20	)	$	(156	)
Interest and dividend income	$	16		$	16		$	43		$	45

7. Income Taxes

The effective tax rate for the nine months ended September 30, 2023 and September 30, 2022 was 23% and 15%, respectively. Consolidated income tax expense for the nine months ended September 30, 2023 was $51 and income tax benefit for the nine months ended September 30, 2022 was $7. The provision for income taxes differs from the amount that would result from applying the federal statutory rate of 21% to income before income taxes primarily due to state and local income taxes.

As of September 30, 2023, and December 31, 2022, the Company has recorded an uncertain tax liability of $2 associated with its state and local NOL carryforward. As of September 30, 2023, the Company does not anticipate any of the uncertain tax liability to reverse in the next twelve months. Energy Harbor’s recognition of net interest associated with unrecognized tax benefits in the first nine months of 2023 and 2022 was not material. The Company is not subject to examination by US Federal or various US State jurisdictions for years prior to 2020.

8. Derivative Instruments

Energy Harbor is exposed to financial risks resulting from fluctuating interest rates and commodity prices, including prices for electricity, natural gas, coal and energy delivery. To manage the volatility related to these exposures, Energy Harbor’s senior management has designed and implemented risk management programs and oversees compliance with corporate risk management policies and established risk management practice.

We engage in economic hedging activities to manage our exposure related to commodity price fluctuations through the use of financial and physical derivative contracts for commodities. These derivatives are accounted for in accordance with U.S. GAAP, which requires that we record all derivatives on the balance sheet at fair value with changes in fair value immediately recognized in earnings as unrealized gains or losses. U.S. GAAP permits an entity to designate qualifying derivative contracts as normal purchases and sales. If designated, those contracts are not recorded at fair value. U.S. GAAP also permits an entity to designate qualifying derivative contracts in a hedge accounting relationship. If a hedge accounting relationship is used, a significant portion of the changes in fair value is not immediately recognized in earnings. We have elected not to apply hedge accounting to our commodity contracts, and we have designated contracts as normal purchases and sales in only limited cases, such as our retail sales contracts.

20

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Energy Harbor accounts for derivative instruments on its consolidated balance sheets at fair value unless they meet the normal purchases and sales criteria. Derivative instruments meeting the normal purchases and sales criteria are accounted for under the accrual method of accounting with their effects included in earnings at the time of contract performance.

The Company uses a variety of derivative instruments to manage commodity price risk. Unrealized gains and losses arising from changes in the fair value of these derivative instruments, as well as realized gains and losses upon settlement of the instruments, are reported in the consolidated statements of loss and comprehensive loss in revenues, purchased power costs and other operating costs. Energy Harbor has contractual derivative agreements through 2026.

Set forth below is a description of derivative instruments currently being used by the Company to manage commodity price risk.

• Commodity Derivatives – Energy Harbor uses both physically and financially settled derivatives to manage its exposure to volatility in commodity prices. Commodity derivatives are used for risk management purposes to hedge exposures when it makes economic sense to do so, including circumstances where the hedging relationship does not qualify for hedge accounting. Commodity swaps and options are used to optimize Company profitability and balance expected sales with expected generation.

Energy Harbor posted $64 of collateral under these commodity derivative contracts, which is posted with clearing houses.

• Financial Transmission Rights (FTRs) – Energy Harbor holds FTRs that generally represent an economic hedge of future congestion charges that will be incurred in connection with Energy Harbor’s load obligations. Energy Harbor acquires the majority of its FTRs in an annual auction through a self-scheduling process involving the use of auction revenue rights allocated to members of PJM that have load serving obligations.

The future obligations for the FTRs acquired at auction are reflected on the consolidated balance sheets and have not been designated as cash flow hedge instruments. Energy Harbor initially records these FTRs at the auction price less the obligation due to PJM, and subsequently adjusts the carrying value of remaining FTRs to their estimated fair value at the end of each accounting period prior to settlement. Changes in the fair value of FTRs held by Energy Harbor are included in other operating costs as unrealized gains or losses.

21

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

Energy Harbor records the fair value of derivative instruments on a gross basis. The following table summarizes the fair value and classification of derivative instruments on the consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively:

	September 30, 2023
	Derivative Assets		Derivative Liabilities
Commodity contracts:
Current	$	175	$	223
Noncurrent (1)		42		33
Total	$	217	$	256

(1) Noncurrent derivative liabilities are included in Other noncurrent liabilities on the consolidated balance sheets.

	December 31, 2022
	Derivative Assets		Derivative Liabilities
Commodity contracts:
Current	$	614	$	561
Noncurrent (1)		162		161
Total	$	776	$	722

(1) Noncurrent derivative liabilities are included in Other noncurrent liabilities on the consolidated balance sheets.

Energy Harbor enters into contracts with counterparties that allow for the offsetting of derivative assets and derivative liabilities under netting arrangements with the same counterparty. These contracts contain margining provisions that require the use of collateral to mitigate credit exposure between Energy Harbor and these counterparties. In situations where collateral is pledged to mitigate exposures related to derivative and non-derivative instruments with the same counterparty, Energy Harbor allocates the collateral based on the percentage of the net fair value of derivative instruments to the total fair value of the combined derivative and non-derivative instruments.

22

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

The following table summarizes the fair value of derivative assets and derivative liabilities on Energy Harbor’s balance sheet after taking into consideration the effect of netting arrangements and collateral on its financial position as of September 30, 2023 and December 31, 2022:

	September 30, 2023
	Gross Amount			Offsetting Instrument			Cash Collateral (Held) Posted		Net Amounts
Commodity contracts:
Derivative assets	$	217		$	(216	)		—	$	1
Derivative liabilities		(256	)		216			—		(40	)
Net amounts	$	(39	)		—			—	$	(39	)
	December 31, 2022
	Gross Amount			Offsetting Instrument			Cash Collateral (Held) Posted		Net Amounts
Commodity contracts:
Derivative assets	$	776		$	(697	)		—	$	79
Derivative liabilities		(722	)		697			—		(25	)
Net amounts	$	54			—			—	$	54

The following table summarizes the volumes associated with the Company’s outstanding derivative transactions for the nine months ended September 30, 2023 and September 30, 2022:

	September 30, 2023
	Purchases		Sales			Net			Units
Electric contracts (1)		23		(14	)		9		MWH
Gas contracts (1)		71		(78	)		(7	)	MMBTU

(1) Volumes in millions.

	September 30, 2022
	Purchases		Sales			Net			Units
Electric contracts (1)		29		(32	)		(2	)	MWH
Gas contracts (1)		155		(201	)		(46	)	MMBTU

(1) Volumes in millions.

23

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

The effect of derivative instruments on the Company’s statements of income / (loss) and comprehensive income / (loss) during the nine months ended September 30, 2023 and September 30, 2022 are summarized in the following table:

	Nine Months Ended
	September 30, 2023									September 30, 2022
	Commodity Contracts			FTRs			Total			Commodity Contracts			FTRs			Total
Unrealized gain (loss):
Other operating expense	$	93			—		$	93		$	(43	)		—		$	(43	)
Realized gain (loss):
Revenues	$	229			2		$	231		$	(604	)		2		$	(602	)
Purchased power	$	(163	)	$	(13	)	$	(176	)	$	454		$	(9	)	$	445

9. Stock-Based Compensation

For the nine months ended September 30, 2023, the Company granted 255 thousand restricted stock units (“RSUs”) with a weighted-average grant date fair value of $76.05. As of September 30, 2023, there were 739 thousand RSUs outstanding. As of September 30, 2023, the Company had unrecognized compensation expense of $15 relating to RSUs that is expected to be recognized over a period of 4 years.

10. Commitments, Guarantees and Contingencies

Guarantees and Other Assurances

Energy Harbor has various financial and performance guarantees and indemnifications that are issued in the normal course of business. They typically include performance guarantees, stand-by letters of credit and debt guarantees. We enter into these arrangements to facilitate commercial transactions with third parties to enhance the value of the transactions. The most significant guarantee as of September 30, 2023 and December 31, 2022 was our unsecured guarantee of EHG’s and EHNG’s outstanding secured notes.

In the normal course of business, Energy Harbor enters into physical or financially settled contracts for the sale and purchase of natural gas, electric capacity, and energy. Certain agreements and derivative instruments contain provisions that require the Company to post collateral. This collateral may be posted in the form of cash or letters of credit, depending on the terms of the individual agreement. The credit support requirements vary by contract and by counterparty. The collateral calculation allows for the offsetting of assets and liabilities with the same counterparty, where the contractual right of offset exists under applicable master netting agreements. Energy Harbor has posted cash collateral of $65 and $17 as of September 30, 2023 and December 31, 2022, respectively.

In the nine months ended September 30, 2023 and 2022, the Company had a substantial portion of purchases from one vendor, representing 20% and 15%, respectively, of total vendor purchases. As of September 30, 2023 and 2022, there was no balance due to this vendor. The Company believes there are numerous other vendors that could be substituted should the supplier become unavailable or non-competitive.

24

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

On October 5, 2021, the Company and certain of its subsidiaries entered into a Zero Carbon Letter of Credit Facility with certain financing institutions (including Royal Bank of Canada, Goldman Sachs and funds affiliated with Avenue Capital Management as initial anchor participants) and Royal Bank of Canada as administrative agent and collateral agent. The Zero Carbon LC Facility had an original expiry of October 5, 2022 (subsequently amended to October 5, 2024) and is secured by a first lien on the equity interests of certain subsidiaries of the Company and certain related assets. Total outstanding letters of credit as of September 30, 2023 and December 31, 2022 was $67 and $102, respectively.

Ongoing Litigation

Governmental Investigations into Activities Surrounding Ohio House Bill 6 (“HB6”)

In July 2020, the Speaker of the Ohio State House of Representatives and four other individuals were arrested in connection with activities related to the passage of HB6. In connection with the US Attorney’s Office investigation into HB6, Energy Harbor received a grand jury subpoena requiring production of certain information. Further, the Securities and Exchange Commission opened an investigation related to HB6 and such investigation is ongoing. In addition, complaints concerning alleged election irregularities related to HB6 have been referred to the Ohio Election Commission. The Company intends to continue to fully cooperate with the government investigations, and the outcome of any governmental investigations into these matters cannot be predicted.

In August 2020, the Ohio Attorney General filed a civil RICO complaint against FirstEnergy Corp. and various Energy Harbor companies related to passage of HB6 (State of Ohio ex rel. Dave Yost, Ohio Attorney General v. FirstEnergy Corp., et al., Franklin County, Ohio Common Pleas Court Case No. 20CV006281 and State of Ohio ex rel. Dave Yost, Ohio Attorney General v. Energy Harbor Corp., et al., Franklin County, Ohio Common Pleas Court Case No. 20CV007386). In addition, two class actions against the Company related to HB6 were pending in Cuyahoga County and the Federal District Court for the Southern District of Ohio. On June 7, 2022 the Company entered into a Settlement Agreement with plaintiffs’ counsel that settled the two class actions in the aggregate amount of $11.5, and the settlement was approved by the applicable court on November 9, 2022.

The results of the governmental investigations and litigation matters described above, together with any future investigations or litigation matters related to the passage of HB6, could divert management’s focus and result in substantial investigation expenses, or otherwise require the commitment of substantial corporate resources. The outcome of the governmental investigations and related litigation is inherently uncertain, and a favorable or unfavorable range of outcomes cannot be predicted. If one or more legal matters were resolved against the Company, its reputation, business, financial condition, results of operations or cash flow may be adversely affected. Further, such an outcome could result in monetary damages, injunctive relief, remedial corporate measures or other relief against the Company that could adversely impact our financial condition and/or operations.

25

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

11. Supplemental Financial Information

Materials and Supplies Inventory

The following is a summary of materials and supplies inventory by classification as of:

	September 30, 2023		December 31, 2022
Plant materials and operating supplies	$	197	$	187
Renewable energy credits		46		68
Natural gas		2		2
Total materials and supplies inventory	$	245	$	257

Property, Plant and Equipment

The following is a summary of property, plant and equipment by classification as of:

Depreciation expense included in the consolidated statements of loss and comprehensive loss for the nine months ended September 30, 2023 and September 30, 2022 was $111 and $105, respectively.

	September 30, 2023			December 31, 2022
Personal property	$	1,105		$	1,020
Nuclear fuel		536			514
Property, plant and equipment, gross		1,641			1,534
Accumulated depreciation & amortization		(475	)		(366	)
Property, plant and equipment, net	$	1,166		$	1,168

Asset Retirement Obligations

Energy Harbor has recognized applicable legal obligations for AROs and the associated cost primarily for the decommissioning of the Beaver Valley, Davis-Besse and Perry nuclear generating facilities, which aggregate to approximately $1,924 and $2,106 as of September30, 2023 and September 30, 2022, respectively. In addition, the Company has recognized conditional AROs, primarily for asbestos remediation.

Energy Harbor uses an expected cash flow approach to measure the fair value of the nuclear decommissioning and environmental remediation AROs, considering the expected timing of settlement of the ARO based on the expected economic useful life of the plants. Over time, the liability is accreted for the change in present value.

26

ENERGY HARBOR CORP. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(amounts in millions)

The following table summarizes the changes to these obligations, reported as AROs in noncurrent liabilities in our consolidated balance sheet, for the nine months ended September, 2023 and 2022, respectively:

	September 30, 2023		September 30, 2022
Asset retirement obligations at January 1	$	1,897	$	2,075
Accretion		27		31
Asset retirement obligations at September 30	$	1,924	$	2,106

27

The following table presents Adjusted EBITDA, which is a non-GAAP number, of Energy Harbor for the last twelve months ended September 30, 2023, and was derived from, and is qualified by reference to, the audited consolidated financial statements of Energy Harbor, including the notes thereto, for the year ended December 31, 2022 included in Exhibit 99.1 to the Current Report on Form 8-K filed by Vistra Corp. with the SEC on May 6, 2023, and the unaudited condensed consolidated financial statements of Energy Harbor, including the notes thereto, for the nine months ended September 30, 2023 included herein.

Energy Harbor

Adjusted EBITDA

(Unaudited) (Millions of Dollars)

	Twelve Months Ended September 30, 2023
Energy Harbor	$	474

(1) The following table provides a reconciliation of adjusted EBITDA to net income for the last twelve months ended September 30, 2023:

	Twelve Months Ended September 30, 2023
Net income	$	260
Income tax expense		64
Interest expense and related charges		—
Depreciation and amortization (a)		206
EBITDA before Adjustments		530
Unrealized net gain resulting from hedging transactions		(25	)
Fresh start / purchase accounting impacts		(32	)
Non-cash compensation expenses		50
Transition and merger expenses		87
PJM capacity performance default impacts		(1	)
Other, net		19
Nuclear decommissioning trust results		(155	)
Adjusted EBITDA	$	474

(a) Includes nuclear fuel amortization of $118.

28

VISTRA CORP.

UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION

On March 6, 2023, Vistra Operations Company LLC (“Parent”), an indirect wholly owned subsidiary of Vistra Corp. (“Vistra” or the “Company”), and Black Pen Inc. (“Merger Sub”), an indirect wholly owned subsidiary of Parent, entered into a transaction agreement (the “Transaction Agreement”) with Energy Harbor Corp. (“Energy Harbor”), pursuant to which, upon the terms and subject to the conditions thereof, Merger Sub will be merged with and into Energy Harbor, with Energy Harbor surviving as an indirect subsidiary of Vistra (the “Merger”). Subject to the terms and conditions of the Transaction Agreement, prior to the consummation of the Merger, Vistra will cause certain of its affiliates to transfer certain of its affiliate entities, including Merger Sub, to a newly formed limited liability company and an indirect subsidiary of Vistra (“Vistra Vision”). Vistra will contribute its nuclear and retail businesses and specified Vistra Zero renewables and storage projects (“Vistra Legacy”) into Vistra Vision (the “Contribution”). The Contribution and the Merger will combine Energy Harbor’s nuclear and retail businesses with Vistra Legacy under Vistra Vision.

In September 2023, Vistra Operations issued $650 million aggregate principal amount of 6.950% senior secured notes (“Senior Secured Notes”) due 2033 and $1.1 billion aggregate principal amount of 7.750% senior unsecured notes (“Senior Unsecured Notes”) due 2031. Vistra incurred fees and expenses related to the Senior Secured Notes and Senior Unsecured Notes that totaled $7 million and $14 million, respectively, for the nine months ended September 30, 2023. These fees and expenses were capitalized as a reduction in the carrying amount of the debt. The net proceeds from both the Senior Secured Notes and Senior Unsecured Notes will be used to finance the transaction and are included in cash and cash equivalents on Vistra’s condensed consolidated balance sheet as of September 30, 2023.

For the purpose of the Unaudited Pro Forma Combined Consolidated Financial Statements, Vistra has assumed a draw down on the Accounts Receivable Financing Facility¹ of $750 million and the Repurchase Facility² of $125 million. Vistra intends to finance the remaining amount with cash on hand. Vistra had approximately $3.2 billion of cash and cash equivalents as of September 30, 2023.

Collectively, the Merger, Contribution, Receivables Facility, and Repurchase Facility are referred to as the “Transactions.” Total consideration to be paid by the Company to Energy Harbor shareholders for the Merger will consist of approximately $3.0 billion in cash, subject to certain adjustments, and a 15% equity interest in Vistra Vision (the “Consideration”). In addition, Vistra Vision will pay up to $100 million of Energy Harbor’s transaction expenses and will assume approximately $430 million of debt from Energy Harbor in the Merger.

The Unaudited Pro Forma Combined Consolidated Balance Sheet as of September 30, 2023 has been prepared to give effect to the Transactions as if they had occurred on September 30, 2023. Consummation of the Transactions remains subject to customary closing conditions of the Merger, including (a) receipt of all requisite regulatory approvals and (b) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. and (c) the divestment of Energy Harbor’s remaining fossil-fueled assets. These closing conditions may not be fulfilled in a timely manner or at all, and, accordingly, the Transactions may not be completed.

¹  TXU Energy Receivables Company LLC, an indirect subsidiary of Vistra, and Vistra Operations are party to an accounts receivable financing facility provided by issuers of asset-backed commercial paper and commercial banks (“Purchasers”) (as amended, the “Receivables Facility”). The Receivables Facility was renewed in July 2023 to extend the term of the Receivables Facility until July 11, 2024 and to increase the aggregate commitment of the committed purchasers to a fixed purchase limit of $750 million. There were no outstanding borrowings under the Receivables Facility as of September 30, 2023.

²  TXU Energy and the other originators under the Receivables Facility have a repurchase facility that is provided on an uncommitted basis by MUFG Bank, Ltd. On July 11, 2023, TXU Energy and the Buyer entered into an amendment (the “Repurchase Amendment”) to the Master Repurchase Agreement. The Repurchase Amendment renewed the Repurchase Facility until July 2024 while maintaining the facility size of $125 million. There were no outstanding borrowings under the Repurchase Facility as of September 30, 2023.

The Unaudited Pro Forma Combined Consolidated Statements of Operations for the nine months ended September 30, 2023 and year ended December 31, 2022 have been prepared to give effect to the Transactions, Senior Secured Notes, and Senior Unsecured Notes as if they had occurred on January 1, 2022.

The Merger will be accounted for using the acquisition method with Vistra as the accounting acquirer in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Under this method of accounting, the aggregate Consideration will be allocated to Energy Harbor’s assets acquired and liabilities assumed based upon their acquisition date estimated fair values. Any differences between the estimated fair value of the Consideration transferred and the estimated fair value of the assets acquired and liabilities assumed will be recorded as goodwill. The final purchase price of Vistra’s acquisition of Energy Harbor will not be known until the date of the consummation of the Merger and could vary materially from the preliminary purchase price. In addition, the Company’s estimates of the fair value of assets acquired and liabilities assumed are preliminary and based on currently available information. Accordingly, the estimate of the Consideration and related acquisition accounting adjustments reflected in this Unaudited Pro Forma Combined Consolidated Financial Information are preliminary and subject to revision based on a final determination of fair value, and such changes could be material.

The Unaudited Pro Forma Combined Consolidated Financial Information presented is based on available information using assumptions the Company believes are reasonable. The Unaudited Pro Forma Combined Consolidated Financial Information and related notes are provided for illustrative purposes only and do not purport to represent the Company’s actual financial position or results of operations had the Transactions occurred on the date indicated, nor do they project the Company’s results of operations or financial position for any future period or date. The Unaudited Pro Forma Combined Consolidated Financial Information does not consider any cost savings, operating synergies, or additional costs that may be incurred to achieve such synergies, or otherwise incurred, after completing the Merger. As such, the actual results reported by the Company in periods following the Transactions may differ materially from the Unaudited Pro Forma Combined Consolidated Financial Information. The Company believes its current estimates provide a reasonable basis of presenting the significant effects of the Transactions. However, the estimates and assumptions are subject to change as additional information becomes available. For purposes of the Unaudited Pro Forma Combined Consolidated Financial Information, the adjustments related to Receivables Facility and Repurchase Facility to effectuate the Transactions are shown in a separate column as “Financing Adjustments.”

The Unaudited Pro Forma Combined Consolidated Financial Information should be read in conjunction with the historical consolidated financial statements and accompanying notes included in Vistra’s unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2023, contained in the Form 10-Q filed on November 7, 2023, Vistra’s audited consolidated financial statements as of and for the year ended December 31, 2022, contained in the Form 10-K filed on March 1, 2023, Energy Harbor��s unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2023 and September 30, 2022, which are included herein, Energy Harbor’s audited consolidated financial statements as of and for the years ended December 31, 2022 and December 31, 2021, which is attached as Exhibit 99.1 to the Form 8-K published on June 6, 2023 and the Transaction Agreement, which is attached as Exhibit 2.1 to the Form 8-K published on March 7, 2023. Energy Harbor’s audited consolidated financial statements as of and for the years ended December 31, 2022 and December 31, 2021 do not reflect the reclassification of fossil-fueled assets and the related operations to discontinued operations which occurred in the second quarter of 2023. As such, the revenue, and expenses of Energy Harbor’s fossil-fueled operations have been reflected as Transactional Adjustments in the Unaudited Pro Forma Combined Consolidated Statement of Operations for the year ended December 31, 2022. See Note 3. Pro Forma Transaction Adjustments and Assumptions.

The Unaudited Pro Forma Combined Consolidated Financial Information have been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” using assumptions set forth in the notes herein. Article 11 permits presentation of reasonably estimable synergies, dis-synergies and other transaction effects that have occurred or are expected to occur (“Management’s Adjustments”). The Company has elected not to present Management’s Adjustments and will only be presenting transaction accounting adjustments in the Unaudited Pro Forma Combined Consolidated Financial Statements.

VISTRA CORP.

Unaudited Pro Forma Combined Consolidated Statement of Operations

Nine Months Ended September 30, 2023

(Millions of Dollars, Except Per Share Amounts)

	Historical Vistra Corp			Energy Harbor, As Adjusted (Note 1)			Transaction Adjustments				Financing Adjustments				Pro Forma Combined
Operating revenues	$	11,701		$	1,742		$	—			$	—			$	13,443
Fuel, purchased power costs and delivery fees		(5,754	)		(766	)		—				—				(6,520	)
Operating costs		(1,277	)		(564	)		(54	)	3(b)		—				(1,895	)
Depreciation and amortization		(1,109	)		(37	)		(194	)	3(c)		—				(1,340	)
Selling, general and administrative expenses		(953	)		(214	)		—				—				(1,167	)
Impairment of long-lived and other assets		(49	)		—			—				—				(49	)
Operating income (loss)		2,559			161			(248	)			—				2,472
Other income		174			162			—				—				336
Nuclear decommissioning trust results		—			57			—				—				57
Other deductions		(9	)		(138	)		—				—				(147	)
Interest expense and related charges		(450	)		(21	)		3		3(d)		(137	)	4(a)		(605	)
Impacts of Tax Receivable Agreement		(128	)		—			102		3(e)		—				(26	)
Net income (loss) before income taxes		2,146			221			(143	)			(137	)			2,087
Income tax (expense) benefit		(470	)		(51	)		33		3(f)		32		4(b)		(456	)
Net income (loss)	$	1,676		$	170		$	(110	)		$	(105	)		$	1,631
Net (income) loss attributable to noncontrolling interest		1			—			(86	)	3(g)		—				(85	)
Net income (loss) attributable to Vistra	$	1,677		$	170		$	(196	)		$	(105	)		$	1,546
Cumulative dividends attributable to preferred stock		(112	)		—			—				—				(112	)
Net income (loss) attributable to Vistra common stock	$	1,565		$	170		$	(196	)		$	(105	)		$	1,434
Weighted average shares of common stock outstanding:
Basic		374,323,466														374,323,466
Diluted		379,102,358														379,102,358
Net income (loss) per weighted average share of common stock outstanding:
Basic	$	4.18													$	3.83
Diluted	$	4.13													$	3.78

See accompanying notes to the Unaudited Pro Forma Combined Consolidated Financial Information.

VISTRA CORP.

Unaudited Pro Forma Combined Consolidated Statement of Operations

Year Ended December 31, 2022

(Millions of Dollars, Except Per Share Amounts)

	Historical Vistra Corp			Energy Harbor, As Adjusted (Note 1)			Transaction Adjustments				Financing Adjustments				Pro Forma Combined
Operating revenues	$	13,728		$	1,735		$	(485	)	3(a)	$	—			$	14,978
Fuel, purchased power costs and delivery fees		(10,401	)		(432	)		320		3(a)		—				(10,513	)
Operating costs		(1,645	)		(927	)		147		3(a)		—				(2,513	)
								(88	)	3(b)
Depreciation and amortization		(1,596	)		(127	)		71		3(a)		—				(1,911	)
								(259	)	3(c)
Selling, general and administrative expenses		(1,189	)		(57	)		(22	)	3(h)		—				(1,268	)
Impairment of long-lived and other assets		(74	)		—			—				—				(74	)
Operating income (loss)		(1,177	)		192			(316	)			—				(1,301	)
Other income		117			—			—				—				117
Nuclear decommissioning trust results		—			(157	)		—				—				(157	)
Other deductions		(4	)		(123	)		120		3(a)		—				(7	)
Interest expense and related charges		(368	)		(34	)		4		3(d)		(187	)	4(a)		(585	)
Impacts of Tax Receivable Agreement		(128	)		—			60		3(e)		—				(68	)
Net income (loss) before income taxes		(1,560	)		(122	)		(132	)			(187	)			(2,001	)
Income tax (expense) benefit		350			15			(21	)	3(a)		43		4(b)		502
								115		3(f)
Net income (loss)	$	(1,210	)	$	(107	)	$	(38	)		$	(144	)		$	(1,499	)
Net (income) loss attributable to noncontrolling interest		(17	)		—			(150	)	3(g)		—				(167	)
Net income (loss) attributable to Vistra	$	(1,227	)	$	(107	)	$	(188	)		$	(144	)		$	(1,666	)
Cumulative dividends attributable to preferred stock		(150	)		—			—				—				(150	)
Net income (loss) attributable to Vistra common stock	$	(1,377	)	$	(107	)	$	(188	)		$	(144	)		$	(1,816	)
Weighted average shares of common stock outstanding:
Basic		422,447,074														422,447,074
Diluted		422,447,074														422,447,074
Net income (loss) per weighted average share of common stock outstanding:
Basic	$	(3.26	)												$	(4.30	)
Diluted	$	(3.26	)												$	(4.30	)

See accompanying notes to the Unaudited Pro Forma Combined Consolidated Financial Information.

VISTRA CORP.

Unaudited Pro Forma Combined Consolidated Balance Sheet

September 30, 2023

(Millions of Dollars)

	Historical Vistra Corp			Energy Harbor, As Adjusted (Note 1)			Transaction Adjustments				Financing Adjustments			Pro Forma Combined
ASSETS
Current assets:
Cash and cash equivalents	$	3,170		$	803		$	(3,100	)	2(a)	$	875	4(c)	$	945
								(803	)	3(j)
Restricted cash		40			—			—				—			40
Trade accounts receivable — net		2,017			263			—				—			2,280
Income taxes receivable		12			—			—				—			12
Inventories		685			245			—				—			930
Commodity and other derivative contractual assets		3,108			175			—				—			3,283
Margin deposits related to commodity contracts		877			—			—				—			877
Margin deposits posted under affiliate financing agreement		435			—			—				—			435
Prepaid expense and other current assets		355			74			—				—			429
Current assets of discontinued operations		—			2			(2	)	3(i)		—			—
Total current assets		10,699			1,562			(3,905	)			875			9,231
Restricted cash		15			—			—				—			15
Investments		1,857			1,865			—				—			3,722
Property, plant and equipment — net		12,346			1,174			4,776		3(k)		—			18,296
Operating lease right-of-use assets		53			—			—				—			53
Goodwill		2,583			—			258		2(a)		—			2,841
Identifiable intangible assets — net		1,883			4			—				—			1,887
Commodity and other derivative contractual assets		743			42			—				—			785
Accumulated deferred income taxes		1,239			—			(4	)	3(l)		—			1,235
Other noncurrent assets		527			15			—				—			542
Non-current assets of discontinued operations		—			50			(50	)	3(i)		—			—
Total assets	$	31,945		$	4,712		$	1,075			$	875		$	38,607
LIABILTIES AND EQUITY
Current liabilities:
Accounts receivable financing	$	—		$	—		$	—			$	875	4(c)	$	875
Long-term debt due currently		1,935			—			—				—			1,935
Trade accounts payable		1,124			72			—				—			1,196
Commodity and other derivative contractual liabilities		4,560			223			—				—			4,783
Margin deposits related to commodity contracts		50			—			—				—			50
Accrued taxes other than income		161			72			—				—			233
Accrued interest		113			4			—				—			117
Asset retirement obligations		123			—			—				—			123
Operating lease liabilities		8			—			—				—			8
Other current liabilities		674			94			22		3(m)		—			790
Current liabilities of discontinued operations		—			4			(4	)	3(i)		—			—
Total current liabilities		8,748			469			18				875			10,110
Margin deposit financing with affiliate		435			—			—				—			435
Long-term debt, less amounts due currently		11,758			431			(45	)	3(n)		—			12,144
Operating lease liabilities		49			—			—				—			49
Commodity and other derivative contractual liabilities		1,576			33			—				—			1,609
Accumulated deferred income taxes		1			1			923		2(a)		—			925
Tax Receivable Agreement obligation		640			—			(102	)	3(o)		—			538
Asset retirement obligations		2,350			1,924			(430	)	3(p)		—			3,844
Other noncurrent liabilities and deferred credits		867			103			—				—			970
Total liabilities		26,424			2,961			364				875			30,624
Commitments and Contingencies
Total equity:
Preferred stock		2,000			—			—				—			2,000
Common stock		5			—			—				—			5
Treasury stock, at cost		(4,278	)		(683	)		683		3(q)		—			(4,278	)
Additional paid-in-capital		10,075			2,041			1,563		2(a)		—			10,605
								(4	)	3(l)
								(2,041	)	3(q)
								(1,029	)	3(r)
Retained (deficit) earnings		(2,306	)		380			(22	)	3(m)		—			(2,226	)
								102		3(o)
								(380	)	3(q)
Accumulated other comprehensive income (loss)		10			13			(13	)	3(q)		—			10
Stockholders’ equity		5,506			1,751			(1,141	)			—			6,116
Noncontrolling interest in subsidiary		15			—			823		2(a)		—			1,867
								1,029		3(r)
Total equity		5,521			1,751			711				—			7,983
Total liabilities and equity	$	31,945		$	4,712		$	1,075			$	875		$	38,607

See accompanying notes to the Unaudited Pro Forma Combined Consolidated Financial Information.

Note 1. Reclassification Adjustments

Certain reclassifications have been made in the historical presentation of Energy Harbor’s financial statements to conform to Vistra’s historical presentation. Additionally, as part of preparing these Unaudited Pro Forma Combined Consolidated Financial Statements, Vistra conducted an initial review of the accounting policies of Energy Harbor to determine if differences in accounting policies require reclassification of Energy Harbor financial statement results to conform to Vistra’s accounting policies. Aside from the accounting policy reclassifications identified below, Vistra did not become aware of any material differences between the accounting policies of Energy Harbor and Vistra. Upon completion of the acquisition, Vistra will perform a comprehensive review of Energy Harbor’s accounting policies. As a result of the review, Vistra may identify additional differences between the accounting policies which, when conformed, could have a material impact to the Unaudited Pro Forma Combined Consolidated Financial Statements.

Reclassification and classification of the Unaudited Pro Forma Combined Consolidated Statement of Operations for the nine months ended September 30, 2023:

	Nine Month Ended September 30, 2023
	(Millions of Dollars)
	Before Reclassification			Reclassification Amount			Ref.	After Reclassification
Revenues		1,961			(1,961	)	(a)		—
Operating revenues					1,742		(a)(e)		1,742
Fuel and purchased power		721			(721	)	(a)(b)		—
Fuel, purchased power costs and delivery fees					766		(b)		766
Depreciation and amortization		64			(27	)	(c)		37
Other operating costs		1,013			(1,013	)	(a)(d)		—
Operating costs					564		(c)(d)		564
Selling, general and administrative expenses					214		(d)		214
Other income / (expense)		24			(24	)	(a)(e)		—
Other income					162		(e)		162
Other deductions					(138	)	(f)		(138	)
Interest expense, net		(23	)		23		(f)(g)		—
Interest expense and related charges					(21	)	(g)		(21	)
Income tax expense (benefit)		51			(51	)	(h)		—
Income tax (expense) benefit					51		(h)		51

(a) Represents reclassification of $1,961 million, $116 million, and $101 million from Revenues, Fuel and purchased power, and Other operating costs, respectively, to Operating revenues. The $116 million represents a reclassification to align Energy Harbor’s presentation of capacity costs to Vistra’s practice of recording capacity costs in revenue. Operating revenues after reclassification also includes the reclassification of $2 million from Other income / (expense) noted in tickmark (e).

(b) Represents reclassification of $721 million and $162 million from Fuel and purchased power and Other operating costs, respectively, to Fuel, purchased power costs and delivery fees. Fuel, purchased power costs and delivery fees after reclassification is comprised of the $721 million reclassification from Fuel and purchased power, $162 million reclassification from Other operating costs, the $116 million reclassification to Operating revenues noted in tickmark (a) and the $1 million reclassification to Operating costs noted in tickmark (d).

(c) Represents reclassification of $27 million and $37 million from Depreciation and amortization to Operating costs and Depreciation and amortization, respectively. The $27 million of accretion expense for asset retirement obligations represents a reclassification to align Energy Harbor’s presentation in Depreciation and amortization to Vistra’s presentation in Operating costs.

(d) Represents reclassification of $536 million, $101 million, $214 million, and $162 million, from Other operating costs to Operating costs, Operating revenues, Selling, general and administrative expenses, and Fuel, purchased power costs and delivery fees, respectively. Operating costs after reclassification is comprised of the $536 million reclassification Other operating costs, the $1 million reclassification from Fuel and purchased power noted in tickmark (b), and the $27 million reclassification from Depreciation and amortization noted in tickmark (c).

(e) Represents the reclassification of $24 million from Other income / (expense) to Other income. Other income after reclassification is comprised of the $24 million reclassification from Other income / (expense), the $2 million reclassification to Operating revenues noted in tickmark (a), and $136 million reclassification to Other deductions noted in tickmark (f).

(f) Represents the reclassification of $136 million and $2 million from Other income / (expense) and Interest expense, net, respectively, to Other deductions.

(g) Represents the reclassification of $21 million and $2 million from Interest expense, net to Interest expense and related charges and Other deductions, respectively.

(h) Represents the reclassification of $51 million from Income tax expense (benefit) to Income tax (expense) benefit.

Reclassification and classification of the Unaudited Pro Forma Combined Consolidated Statement of Operations for the year ended December 31, 2022:

	Year Ended December 31, 2022
	(Millions of Dollars)
	Before Reclassification			Reclassification Amount			Ref.	After Reclassification
Revenues		2,005			(2,005	)	(a)(d)		—
Operating revenues					1,735		(a)		1,735
Fuel and purchased power		449			(449	)	(a)(b)		—
Fuel, purchased power costs and delivery fees					432		(b)		432
Depreciation and amortization		169			(42	)	(c)		127
Other operating costs		1,195			(1,195	)	(a)(d)		—
Operating costs					927		(c)(d)		927
Selling, general and administrative expenses					57		(d)		57
Other income / (expense)		(123	)		123		(d)(e)(f)		—
Other deductions					(123	)	(e)		(123	)
Interest expense, net		(34	)		34		(f)		—
Interest expense and related charges					(34	)	(f)		(34	)
Income tax expense (benefit)		(15	)		15		(g)		—
Income tax (expense) benefit					(15	)	(g)		(15	)

(a) Represents reclassification of $1,998 million, $316 million, and $53 million from Revenues, Fuel and purchased power, and Other operating costs, respectively, to Operating revenues. The $316 million represents a reclassification to align Energy Harbor’s presentation of capacity costs to Vistra’s practice of recording capacity costs in revenue.

(b) Represents reclassification of $449 million and $299 million from Fuel and purchased power and Other operating costs, respectively, to Fuel, purchased power costs and delivery fees. Fuel, purchased power costs and delivery fees after reclassification is comprised of the $449 million reclassification from Fuel and purchased power, $299 million reclassification from Other operating costs, and the $316 million reclassification to Operating revenues noted in tickmark (a).

(c) Represents reclassification of $42 million and $127 million from Depreciation and amortization to Operating costs and Depreciation and amortization, respectively. The $42 million of accretion expense for asset retirement obligations represents a reclassification to align Energy Harbor’s presentation in Depreciation and amortization to Vistra’s presentation in Operating costs.

(d) Represents reclassification of $885 million, $53million, $64 million, and $299 million from Other operating costs to Operating costs, Operating revenues, Selling, general and administrative expenses, and Fuel, purchased power costs and delivery fees, respectively. Operating costs after reclassification is comprised of the $885 million reclassification from Other operating costs and the $42 million reclassification from Depreciation and amortization noted in tickmark (c). Selling, general and administrative expenses after reclassification is comprised of the $64 million reclassification from Other operating costs and the $7 million reclassification from Revenues.

(e) Represents the reclassification of $123 million from Other income / (expense), to Other deductions.

(f) Represents the reclassification of $34 million from Interest expense, net to Interest expense and related charges.

(g) Represents the reclassification of $15 million from Income tax expense (benefit) to Income tax (expense) benefit.

Reclassification and classification of the Unaudited Pro Forma Combined Consolidated Balance Sheet:

	September 30, 2023
	(Millions of Dollars)
	Before Reclassification			Reclassification Amount			Ref.	After Reclassification
Receivables, net		263			(263	)	(a)		—
Trade accounts receivable — net					263		(a)		263
Materials and supplies inventory		245			(245	)	(b)		—
Inventories					245		(b)		245
Derivatives (current assets)		175			(175	)	(c)		—
Commodity and other derivative contractual assets (current assets)					175		(c)		175
Prepayments and other		82			(82	)	(d)		—
Prepaid expense and other current assets					74		(d)		74
Property, plant and equipment, net		1,166			(1,166	)	(e)		—
Property, plant and equipment — net					1,174		(d)(e)		1,174
Nuclear plant decommissioning trusts		1,865			(1,865	)	(f)		—
Investments					1,865		(f)		1,865
Derivatives (noncurrent assets)		42			(42	)	(g)		—
Commodity and other derivative contractual assets (noncurrent assets)					42		(g)		42
Other (noncurrent assets)		19			(19	)	(h)		—
Identifiable intangible assets — net					4		(h)		4
Other noncurrent assets					15		(h)		15
Accounts payable		53			(53	)	(i)		—
Trade accounts payable					72		(i)(k)		72
Derivatives (current liabilities)		223			(223	)	(j)		—
Commodity and other derivative contractual liabilities (current liabilities)					223		(j)		223
Other (current liabilities)		132			(132	)	(k)		—
Other current liabilities					94		(k)		94
Accrued taxes other than income					72		(k)(m)		72
Accrued interest					4		(k)		4
Long term debt		431			(431	)	(l)		—
Long-term debt, less amounts due currently					431		(l)		431
Other noncurrent liabilities		194			(194	)	(m)		—
Commodity and other derivative contractual liabilities (noncurrent liabilities)					33		(m)		33
Other noncurrent liabilities and deferred credits					103		(k)(m)		103
Accumulated deferred income taxes - liability					1		(m)		1
Common stock, preferred stock and additional-paid-in-capital		2,041			(2,041	)	(n)		—
Additional paid-in-capital					2,041		(n)		2,041
Cost of shares held in treasury		(683	)		683		(o)		—
Treasury stock, at cost					(683	)	(o)		(683	)
Retained earnings		380			(380	)	(p)		—
Retained (deficit) earnings					380		(p)		380

(a) Represents reclassification of $263 million from Receivables, net to Trade accounts receivable — net.

(b) Represents reclassification of $245 million from Materials and supplies inventory to Inventories.

(c) Represents reclassification of $175 million from Derivatives (current assets) to Commodity and other derivative contractual assets (current assets).

(d) Represents reclassification of $74 million and $8 million from Prepayments and other to Prepaid expense and other current assets and Property, plant and equipment – net, respectively.

(e) Represents reclassification of $1,166 million from Property, plant and equipment, net to Property, plant and equipment — net. Property, plant and equipment — net after reclassification is comprised of the reclassification of $1,166 million from Property, plant and equipment net and the reclassification of $8 million from Prepayments and other noted in tickmark (d).

(f) Represents reclassification of $1,865 million from Nuclear plant decommissioning trusts to Investments.

(g) Represents reclassification of $42 million from Derivatives (noncurrent assets) to Commodity and other derivative contractual assets (noncurrent assets).

(h) Represents reclassification of $4 million and $15 million from Other (noncurrent asset) to Identifiable intangible assets — net and Other noncurrent assets, respectively.

(i) Represents reclassification of $53 million and $19 million from Accounts payable and Other (current liabilities), respectively, to Trade accounts payable.

(j) Represents reclassification of $223 million from Derivatives (current liabilities) to Commodity and other derivative contractual liabilities (current liabilities).

(k) Represents reclassification of $13 million, $94 million, $2 million, $19 million, and $4 million from Other (current liabilities) to Accrued taxes other than income, Other current liabilities, Other noncurrent liabilities and deferred credits, Trade accounts payable, and Accrued interest, respectively.

(l) Represents reclassification of $431 million from Long term debt to Long-term debt, less amounts due currently.

(m) Represents reclassification of $1 million, $33 million, $101 million, and $59 million from Other noncurrent liabilities to Accumulated deferred income taxes – liability, Commodity and other derivative contractual liabilities (noncurrent liabilities), Other noncurrent liabilities and deferred credits, and Accrued taxes other than income, respectively.

(n) Represents reclassification of $2,041 million from Common stock, preferred stock and additional-paid-in-capital to Additional paid-in-capital.

(o) Represents reclassification of $683 million from Cost of shares held in treasury to Treasury stock, at cost.

(p) Represents reclassification of $380 million from Retained earnings to Retained (deficit) earnings.

Note 2. Estimated Merger Consideration and Preliminary Purchase Price Consideration

(a) As the accounting acquirer, Vistra will account for the Merger using the acquisition method of accounting for business combinations in accordance with ASC 805. Vistra’s allocation of the preliminary estimated purchase price with respect to the Merger is based on estimates of, and assumptions related to, the fair value of assets to be acquired and liabilities to be assumed as of September 30, 2023, using currently available information. Because the Unaudited Pro Forma Combined Consolidated Financial Statements have been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on the financial position and results of operations of the combined business may be materially different from the pro forma amounts included herein. Vistra expects to finalize the purchase price allocation as soon as reasonably practicable after completing the Merger, which will not extend beyond the one-year measurement period provided under ASC 805.

The preliminary purchase price allocation is subject to change due to several factors, including, but not limited to, the following:

• Changes in the estimated fair value of the Vistra Vision equity issued to certain Energy Harbor stockholders as a portion of the Consideration;

• Changes in the estimated fair value of Energy Harbor’s identifiable assets acquired and liabilities assumed, including the presentation and measurement of related deferred tax assets and liabilities, as of the closing of the Transactions, which could result from changes in energy prices, discount rates and other factors;

• Changes in the estimated value of Energy Harbor’s asset retirement obligation, which could result from changes in the credit adjusted risk free rate and escalation factors; and

• The factors described in the section entitled “Risk Factors” within Vistra’s Form 10-Q filed on November 7, 2023 and Vistra’s Form 10-K filed on March 1, 2023.

The estimated preliminary purchase price consideration in accordance with ASC 805 equals (i) the cash consideration expected to be paid by Vistra plus (ii) the preliminary estimate of 15% of the fair value of net Vistra Legacy assets to be contributed to Vistra Vision by Vistra, which includes the assumption of $3.0 billion of debt which will consist of intercompany debt with Parent and debt that would be held by certain subsidiaries in Vistra Vision. The tables below represent the preliminary value of the purchase price consideration under ASC 805 and its allocation to the net assets acquired, with the excess recorded as goodwill. The goodwill is attributable to the expected synergies of the combined business operations.

	Preliminary Purchase Price Consideration
	(Millions of Dollars)
Cash consideration	$	3,100
Preliminary estimate of 15% of the fair value of net assets to be contributed to Vistra Vision by Vistra		1,563
Estimated total Merger Consideration for 85% of Energy Harbor	$	4,663
	Preliminary Purchase Price Allocation
	(Millions of Dollars)
Assets acquired
Trade accounts receivable- net	$	263
Inventories		245
Commodity and other derivative contractual assets		175
Prepaid expense and other current assets		74
Investments		1,865
Property, plant and equipment- net		5,950
Goodwill		258
Identifiable intangible assets- net		4
Commodity and other derivative contractual assets		42
Other noncurrent assets		15
Total assets acquired	$	8,891
Liabilities assumed
Trade accounts payable	$	72
Commodity and other derivative contractual liabilities (current liabilities)		223
Other current liabilities		94
Accrued taxes other than income		72
Accrued interests		4
Long-term debt, less amounts due currently		386
Asset retirement obligations		1,494
Other noncurrent liabilities and deferred credits		103
Commodity and other derivative contractual liabilities (noncurrent liabilities)		33
Accumulated deferred income taxes		924
Total liabilities assumed	$	3,405
Noncontrolling interest of acquired net assets	$	823
Net assets acquired	$	4,663

Note 3. Pro Forma Transaction Adjustments and Assumptions

Statement of Operations for the nine months ended September 30, 2023 and year ended December 31, 2022:

(a) Reflects the elimination of historical revenues and expenses associated with Energy Harbor’s legacy fossil-fueled assets for the year ended December 31, 2022. Energy Harbor has signed definitive agreements to sell these assets to third parties, which are required to be consummated as a condition to closing of the Merger. During the nine months ended September 30, 2023, Energy Harbor deactivated its last power facility associated with its fossil-fueled assets and the related operations were classified as discontinued operations. As the Unaudited Pro Forma Combined Consolidated Statement of Operations for the nine months ended September 30, 2023 present Net income (loss) attributable to Vistra common stock from continuing operations, no adjustment was needed to remove these balances for the nine months ended September 30, 2023. Energy Harbor closed the sale of the remaining fossil assets in the third quarter of 2023.

(b) Reflects the adjustment to accretion expense related to the recalculation of the assets retirement obligations using Vistra’s credit-adjusted risk-free rate.

(c) Reflects the incremental depreciation expense related to the step-up in the preliminary fair value measurement of the Energy Harbor nuclear assets. The remaining estimated depreciable lives of the nuclear assets range from 12 to 24 years.

(d) Reflects the decrease to interest expense accretion for the nine months ended September 30, 2023 and year ended December 31, 2022, respectively, related to the fair value adjustment to Energy Harbor’s $430 million of debt which will be assumed by the Company as part of the Merger.

(e) Reflects adjustments to the accretion expense resulting from the impacts of the Merger on the forecasted payments under the Tax Receivable Agreement obligation. The adjustments are driven by the forecasted taxable income of the combined partnership entity, which results in changes to the forecasted payments under the Tax Receivable Agreement obligation. The adjusted accretion expense was based off the change in estimate as of September 30, 2023. The adjustment resulted in decreases in expense of $102 million and $60 million for the nine months ended September 30, 2023 and year ended December 31, 2022, respectively. The estimated obligation and related accretion expense is based on certain assumptions which are subject to significant uncertainty, are not yet final and are subject to change.

(f) Reflects the estimated income tax impact of the pro forma adjustments from the Merger at the estimated blended federal and state statutory tax rate of approximately 23.2%. For the nine months ended September 30, 2023 and year ended December 31, 2022. Because the tax rates used for these Unaudited Pro Forma Combined Consolidated financial statements are an estimate, the blended rate will likely vary from the actual effective rate in periods subsequent to the completion of the Transactions.

(g) Reflects the adjustment to Net (income) loss attributable to noncontrolling interest for the 15% equity in Vistra Vision which will be issued to certain shareholders of Energy Harbor as part of the Consideration.

(h) Reflects $22 million of transaction costs expected to be incurred subsequent to September 30, 2023. These transaction costs are preliminary estimates; the final amounts and the resulting effect on Vistra’s financial position and results of operations may differ significantly. Transaction costs of $43 million and $23 million are included in the historical income statement of Vistra and Energy Harbor, respectively, for the nine months ended September 30, 2023 and $1 million and $9 million are included in the historical income statement of Vistra and Energy Harbor, respectively, for year ended December 31, 2022. These costs are nonrecurring and will not affect Vistra’s income statement beyond 12 months after the close of the Transactions.

Balance Sheet as of September 30, 2023:

(i) Reflects the derecognition of assets, liabilities and equity components associated with Energy Harbor’s legacy fossil-fueled assets. Energy Harbor has signed definitive agreements to sell these assets to third parties, which are required to be consummated as a condition to closing of the Merger. During the nine months ended September 30, 2023, Energy Harbor deactivated its last power facility associated with its fossil-fueled assets and the related operations were classified as discontinued operations.

(j) Reflects the historical amount of Energy Harbor cash and cash equivalent balance as of September 30, 2023 that will not be transferred to Vistra as part of the Transactions per the Transaction Agreement.

(k) Reflects the increase to property, plant and equipment, net to record Energy Harbor’s property, plant and equipment at their respective estimated fair values. The fair value of Energy Harbor’s property, plant and equipment related to its nuclear assets and retail business operations were estimated using a discounted cash flow method which was based on a number of factors including forecasted power prices, fuel prices, capacity revenues, operating parameters, operating and maintenance costs and other variables. The cash flows for the assets were discounted using rates between 8% and 9%, depending on the related technology and market that each respective asset operates in. Under this method, the fair value of Energy Harbor’s property, plant and equipment is estimated to be approximately $5,950 million. The estimate is preliminary, subject to change and could vary materially from the actual adjustment.

(l) Reflects the adjustment to deferred income taxes to record the estimated deferred income tax effects of combining Vistra’s and Energy Harbor’s operations. The deferred tax adjustment assumes a forecasted blended statutory rate of 23.2%. Because the tax rates used for these Unaudited Pro Forma Combined Consolidated Financial Statements are an estimate, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the Transactions.

(m) Reflects the accrual of $22 million of estimated transaction costs expected to be incurred subsequent to September 30, 2023. These transaction costs are preliminary estimates; the final amounts and the resulting effect on Vistra’s financial position may differ significantly.

(n) Reflects the decrease to long-term debt, less amounts due currently, for the fair value adjustment related to Energy Harbor’s long-term debt.

(o) Reflects the decrease of $102 million related to the non-current portion of the Tax Receivable Agreement, resulting from the impacts of the Transactions on the forecasted payments under the Tax Receivable Agreement obligation. The adjustments to the Tax Receivable Agreement obligation are driven by the forecasted taxable income of the combined partnership entity, which results in changes to the forecasted payments under the Tax Receivable Agreement obligation. The adjusted forecasted payments were used to determine the obligation based on Vistra’s accounting policy related to changes in estimates for the obligation. The estimated obligation is based on certain assumptions which are subject to significant uncertainty, are not yet final and are subject to change.

(p) Reflects the reduction in asset retirement obligations due to the recalculation of the asset retirement obligation using Vistra’s credit-adjusted risk-free rate.

(q) Reflects preliminary adjustments to remove historical Energy Harbor equity balances.

(r) Reflects the preliminary adjustment to recognize the book value of the noncontrolling interest (“NCI”) of Vistra Legacy assets contributed to Vistra Vision. This adjustment reflects the reduction in parent equity and offsetting increase in NCI for the change in Vistra’s interest in its Vistra Legacy assets contributed to Vistra Vision from 100% to 85%. The adjustment takes into consideration that Vistra’s contribution of the Vistra Legacy assets to Vistra Vision is a contribution of assets under common control and as such, are recorded at the historical book value of the assets as required under ASC 810, Consolidations. Vistra’s contribution of the Vistra Legacy assets to Vistra Vision assumes that all current intercompany balances associated with the assets contributed will be forgiven and are reflected as equity transactions. Additionally, the adjustment includes the assumption of $3.0 billion of new debt issued by Vistra Vision. The book value of the Vistra Legacy assets as of September 30, 2023 are unaudited and are based on certain assumptions that are not yet final and are subject to change.

Note 4. Financing Adjustments

Vistra expects to enter into additional financing transactions to effectuate the Merger. For the purposes of the Unaudited Pro Forma Combined Consolidated Financial Statements, it is assumed that Vistra will draw on the Receivables Facility of $750 million and the Repurchase Facility of $125 million. The remaining amount will be funded with cash on hand. The Unaudited Pro Forma Combined Consolidated Financial Information does not reflect any potential future cash generated by Vistra subsequent to September 30, 2023 through the expected completion date of the Merger. The actual amount of debt and interest expense incurred could differ from the amount of debt and interest expense reflected in the Unaudited Pro Forma Combined Consolidated Financial Information and are subject to change.

Statement of Operations for the nine months ended September 30, 2023 and year ended December 31, 2022:

For pro forma purposes, interest expense, including amortization of fees, is calculated based on pro forma period presented under the Repurchase Facility, which assumes Secured Overnight Financing Rate (“SOFR”) or another base rate plus an applicable margin, the Receivables Facility, the Senior Secured Notes, and the Senior Unsecured Notes.

(a) Reflects the net increase to interest expense and related charges resulting from the issuance of debt and draw on the Receivables Facility and Repurchase Facility to effectuate the Transactions as follows:

	Nine Months Ended September 30, 2023		Year Ended December 31, 2022
	(Millions of Dollars)
Interest expense related to Receivables Facility	$	34	$	45
Interest expense related to Repurchase Facility		6		9
Interest expense related to Senior Secured Notes		33		46
Interest expense related to Senior Unsecured Notes		64		87
Net increase to Interest expense and other charges	$	137	$	187

A 0.125% change in the variable interest rate of the Repurchase Facility would increase or decrease interest expense in the Unaudited Pro Forma Combined Consolidated Statement of Operations for each of the nine months ended September 30, 2023 and year ended December 31, 2022 by less than $1 million.

(b) Reflects the estimated income tax impact of the financing pro forma adjustments at the estimated blended federal and state statutory tax rate of approximately 23.2% for the nine months ended September 30, 2023 and year ended December 31, 2022. Because the tax rates used for these Unaudited Pro Forma Combined Consolidated financial statements are an estimate, the blended rate will likely vary from the actual effective rate in periods subsequent to the completion of the Transactions.

Balance Sheet as of September 30, 2023:

(c) Reflects adjustments related to the financing transactions as outlined below:

	September 30, 2023
	(Millions of Dollars)
Cash received from Receivables Facility	$	750
Cash received from Repurchase Facility		125
Total adjustment to Cash and cash equivalents	$	875
Draw on Receivables Facility	$	750
Draw on Repurchase Facility		125
Total adjustments to Account receivable financing	$	875