Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

The income tax provision from continuing operations consisted of the following amounts:



	Year Ended December 31,
	2018			2017			2016
	(In millions, except percentages)
Current
State	$	6		$	19		$	6
Total — current	6			19			6
Deferred
U.S. Federal	(16		)	(60		)	23
State	16			(5		)	(6		)
Foreign	1			2			2
Total — deferred	1			(63		)	19
Total income tax expense/(benefit)	$	7		$	(44	)	$	25
Effective income tax rate	1.5		%	3.2		%	(2.7		)%

The following represents the domestic and foreign components of income/(loss) from continuing operations before income taxes:

A reconciliation of the U.S. federal statutory tax rate to NRG's effective tax rate is as follows:



	Year Ended December 31,
	2018			2017			2016
	(In millions, except percentages)
Income/(loss) from continuing operations before income taxes	$	467		$	(1,389	)	$	(931	)
Tax at federal statutory tax rate	98			(486		)	(326		)
State taxes	18			19			—
Foreign operations	—			2			10
Permanent differences	7			—			—
Tax Act - corporate income tax rate change	—			665			—
Valuation allowance due to corporate income tax rate change	—			(660		)	—
Valuation allowance - current period activities	(106		)	455			382
Impact of non-taxable equity earnings	—			(5		)	22
Book goodwill impairment	—			30			—
Net interest accrued on uncertain tax positions	—			—			1
Production tax credits ("PTC")	(7		)	(8		)	(7		)
Recognition of uncertain tax benefits	1			(5		)	2
State rate change including true-up to current period activity	—			—			(59		)
Alternative minimum tax ("AMT") refundable credit	(4		)	(64		)	—
Other	—			13			—
Income tax expense/(benefit)	$	7		$	(44	)	$	25
Effective income tax rate	1.5		%	3.2		%	(2.7		)%

The temporary differences, which gave rise to the Company's deferred tax assets and liabilities consisted of the following:



	As of December 31,
	2018			2017
	(In millions)
Deferred tax liabilities:
Emissions allowances	$	15		$	15
Derivatives, net	37			17
Investment in projects	180			337
Discount/premium on notes	—			1
Deferred financing costs	21			2
Other	1			5
Discontinued operations	36			49
Total deferred tax liabilities	290			426
Deferred tax assets:
Deferred compensation, accrued vacation and other reserves	134			141
Difference between book and tax basis of property	554			611
Goodwill	11			38
Differences between book and tax basis of contracts	38			52
Pension and other postretirement benefits	87			74
Equity compensation	9			10
Bad debt reserve	14			14
U.S. capital loss carryforwards	—			1
U.S. Federal net operating loss carryforwards	2,241			596
Foreign net operating loss carryforwards	62			66
State net operating loss carryforwards	379			128
Foreign capital loss carryforwards	1			1
Federal and state tax credit carryforwards	381			368
Federal benefit on state uncertain tax positions	6			7
Intangibles amortization (excluding goodwill)	21			98
Interest disallowance carryforward per §163(j) of the Tax Act	102			—
Inventory obsolescence	7			12
Discontinued operations	17			185
Total deferred tax assets	4,064			2,402
Valuation allowance	(3,812		)	(1,855		)
Discontinued operations	19			(8		)
Total deferred tax assets, net of valuation allowance	271			539
Net deferred tax (liability)/asset	$	(19	)	$	113

The following table summarizes NRG's net deferred tax position:



	As of December 31,
	2018			2017
	(In millions)
Deferred tax asset — continuing operations	$	46		$	6
Deferred tax asset — discontinued operations	—			128
Deferred tax liability— continuing operations	(65		)	(21		)
Net deferred tax (liability)/asset	$	(19	)	$	113

The following table reconciles the total amounts of uncertain tax benefits:



	As of December 31,
	2018			2017
	(In millions)
Balance as of January 1	$	30		$	34
Increase due to current year positions	4			4
Decrease due to prior year positions	—			(8		)
Decrease due to settlements and payments	(8		)	—
Uncertain tax benefits as of December 31	$	26		$	30