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Tax Receivable Agreement Obligation | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Tax Receivable Agreement Obligation | TAX RECEIVABLE AGREEMENT OBLIGATION On the Effective Date, Vistra entered into the TRA with a transfer agent on behalf of certain former first-lien creditors of TCEH. The TRA generally provides for the payment by us to holders of TRA Rights of 85% of the amount of cash savings, if any, in U.S. federal and state income tax that we realize in periods after Emergence as a result of (a) certain transactions consummated pursuant to the Plan of Reorganization (including the step-up in tax basis in our assets resulting from the PrefCo Preferred Stock Sale), (b) the tax basis of all assets acquired in connection with the acquisition of two CCGT natural gas-fueled generation facilities in April 2016 and (c) tax benefits related to imputed interest deemed to be paid by us as a result of payments under the TRA, plus interest accruing from the due date of the applicable tax return. Pursuant to the TRA, we issued TRA Rights for the benefit of the first-lien secured creditors of TCEH entitled to receive such TRA Rights under the Plan of Reorganization. Such TRA Rights are entitled to certain registration rights more fully described in the Registration Rights Agreement (see Note 20). As of January 1, 2023, 426,369,370 of TRA Rights were outstanding. In December 2023, Vistra repurchased (Repurchase) approximately 74% of the TRA Rights to receive payments under the TRA from a select group of registered holders of the TRA Rights (Selling Holders) in exchange for consideration of $1.50 per repurchased TRA Right, totaling an aggregate purchase price for the Repurchase of approximately $476 million. The consideration for the Repurchase was paid through the issuance of 476,081 shares of Series C Preferred Stock (see Note 15) to the Selling Holders in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act. As part of the transaction, the Company agreed to file a shelf registration statement on Form S-3 registering the resale of the shares by the Selling Holders of Series C Preferred Stock from time to time under Rule 415 of the Securities Act, which was filed on January 29, 2024. If the Company repurchases TRA Rights at any time during the 180 days following December 29, 2023 at a price per TRA Right greater than $1.50, the Company will pay the Selling Holders an amount equal to such excess purchase price per TRA Right sold by the Selling Holders. In connection with the Repurchase, holders of approximately 74% of the outstanding TRA Rights consented to certain amendments to the TRA which were effected in an Amended and Restated Tax Receivables Agreement (A&R TRA), dated as of December 29, 2023. Such amendments to the TRA include (i) the removal of the Company's obligation to provide registered holders of the TRA Rights (Holders) with regular reporting and access to information, (ii) limitations on the transferability of the TRA Rights, (iii) removal of certain obligations of the Company in the event it incurs indebtedness and (iv) a change to the definition of "Change of Control." In connection with the Repurchase, in the year ended December 31, 2023, we recognized a $29 million gain in other income in our consolidated statements of operations. The gain represents the difference between the $506 million carrying value of the portion of the TRA liability that was repurchased and the $476 million fair value of the Series C Preferred Stock issued. On January 11, 2024, Vistra repurchased an additional 43,494,944 of outstanding TRA Rights from a select group of registered holders of TRA Rights in exchange for consideration of $1.50 per repurchased TRA Right. Total consideration of $65 million was paid using cash on hand. On January 31, 2024, Vistra announced a cash tender offer to purchase any and all outstanding TRA Rights in exchange for consideration of $1.50 per tendered TRA Right accepted for purchase prior to close of business on February 13, 2024 (Early Tender Date), which included an early tender premium of $0.05 per TRA Right accepted for purchase. As of the Early Tender Date, 55,056,931 TRA Rights were accepted for purchase for total consideration of $83 million, which was paid using cash on hand. TRA Rights accepted for purchase after the Early Tender Date, but prior to close of business on February 28, 2024, will receive consideration of $1.45 per TRA Right accepted for purchase, which will be paid using cash on hand. As of the Early Tender Date, we have repurchased an aggregate 98% of the original outstanding TRA Rights, of which 10,430,083 TRA Rights remain outstanding. The following table summarizes the changes to the TRA obligation, reported as other current liabilities and Tax Receivable Agreement obligation in our consolidated balance sheets, for the years ended December 31, 2023, 2022 and 2021.
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
TRA obligation at the beginning of the period | $ | 522 |  |  | $ | 395 |  |  | $ | 450 |
Accretion expense | 82 |  |  | 64 |  |  | 62 |
Changes in tax assumptions impacting timing of payments (a) | 82 |  |  | 64 |  |  | (115) |
Impacts of Tax Receivable Agreement | 164 |  |  | 128 |  |  | (53) |
Payments | (9) |  |  | (1) |  |  | (2) |
Repurchase of TRA Rights | (506) |  |  | — |  |  | — |
TRA obligation at the end of the period | 171 |  |  | 522 |  |  | 395 |
Less amounts due currently | (7) |  |  | (8) |  |  | (1) |
Noncurrent TRA obligation at the end of the period | $ | 164 |  |  | $ | 514 |  |  | $ | 394 |
____________ (a)During the year ended December 31, 2023, we recorded an increase to the carrying value of the TRA obligation totaling $82 million as a result of adjustments to forecasted taxable income due to increases in longer-term commodity price forecasts. During the year ended December 31, 2022, we recorded an increase to the carrying value of the TRA obligation totaling approximately $64 million as a result of adjustments to forecasted book and taxable income due to increases in commodity price forecasts. During the year ended December 31, 2021, we recorded a decrease to the carrying value of the TRA obligation totaling $115 million as a result of adjustments to forecasted taxable income, including the financial impacts of Winter Storm Uri, and anticipated tax benefits available under current tax laws for planned additional renewable development projects. As of December 31, 2023, the estimated carrying value of the TRA obligation totaled $171 million, which represents the discounted amount of projected payments under the TRA. The projected payments are based on certain assumptions, including but not limited to (a) the federal corporate income tax rate of 21%, (b) estimates of our taxable income in the current and future years and (c) additional states that Vistra now operates in, including the relevant tax rate and apportionment factor for each state. Our taxable income takes into consideration the current federal tax code, various relevant state tax laws and reflects our current estimates of future results of the business. The estimates of future business results include assumptions related to renewable development projects that Vistra is planning to execute that generate significant tax benefits. These benefits have a material impact on the timing of TRA obligation payments. These assumptions are subject to change, and those changes could have a material impact on the carrying value of the TRA obligation. As of December 31, 2023, and excluding the January and February 2024 activity discussed above, the aggregate amount of undiscounted federal and state payments under the TRA is estimated to be approximately $350 million, with more than half of such amount expected to be paid during the next 15 years, and the final payment expected to be made around the year 2056 (if the TRA is not terminated earlier pursuant to its terms). The carrying value of the obligation is being accreted to the amount of the gross expected obligation using the effective interest method. Changes in the amount of this obligation resulting from changes to either the timing or amount of TRA payments are recognized in the period of change and measured using the discount rate inherent in the initial fair value of the obligation. The TRA provides that, in the event that Vistra breaches any of its material obligations under the TRA, or upon certain mergers, asset sales, or other forms of business combination or certain other changes of control, the transfer agent under the TRA may treat such event as an early termination of the TRA, in which case Vistra would be required to make an immediate payment to the holders of the TRA Rights equal to the present value (at a discount rate equal to three-month CME Term SOFR plus the tenor spread adjustment of 0.26161% plus 100 basis points) of the anticipated future tax benefits based on certain valuation assumptions. The LIBOR provisions of the TRA are subject to the Adjustable Interest Rate (LIBOR) Act of 2022 (LIBOR Act) and the regulations promulgated to carry out the LIBOR Act (LIBOR Regulations). With respect to payments under the TRA, pursuant to the LIBOR Act and the LIBOR Regulations, the "Board-selected benchmark replacement" (BSBR) of three-month CME Term SOFR plus the tenor spread adjustment of 0.26161% automatically became the benchmark replacement to three-month LIBOR on July 1, 2023 and, in addition, the four conforming changes promulgated by the Federal Reserve System Board in the LIBOR Regulations (each of which is a technical or administrative in nature) also apply to the TRA, by operation of law, to effectuate the implementation and use of the foregoing BSBR.

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