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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income tax provision from continuing operations

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

			Year Ended December 31,
(In millions, except effective income tax rate)			2020						2019						2018
Current
State			$	22					$	2					$	6
Foreign			4						4						—
Total — current			26						6						6
Deferred
U.S. Federal			168						(3,000)						(16)
State			60						(340)						16
Foreign			(3)						—						1
Total — deferred			225						(3,340)						1
Total income tax expense/(benefit)			$	251					$	(3,334)					$	7
Effective income tax rate			33.0		%				(424.2)		%				1.5		%

Domestic and foreign components of income/(loss) before income tax (benefit)/expense

The following represented the domestic and foreign components of income from continuing operations before income taxes:

			Year Ended December 31,
(In millions)			2020						2019						2018
U.S.			$	749					$	771					$	468
Foreign			12						15						(1)
Total			$	761					$	786					$	467

Reconciliation of the U.S. federal statutory rate to NRG's effective rate

Reconciliations of the U.S. federal statutory tax rate to NRG's effective tax rate were as follows:

			Year Ended December 31,
(In millions, except effective income tax rate)			2020						2019						2018
Income from continuing operations before income taxes			$	761					$	786					$	467
Tax at federal statutory tax rate			160						165						98
State taxes			18						13						18
Permanent differences			8						(9)						7
Changes in valuation allowance			24						(3,492)						(106)
Deferred impact of state tax rate changes			2						12						—
Production tax credits ("PTC")			—						—						(7)
Recognition of uncertain tax benefits			3						(10)						1
Return to provision adjustments			36						—						—
Alternative minimum tax ("AMT") refundable credit			—						—						(4)
Other			—						(13)						—
Income tax expense/(benefit)			$	251					$	(3,334)					$	7
Effective income tax rate			33.0		%				(424.2)		%				1.5		%

Company's deferred tax assets and liabilities

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

			As of December 31,
(In millions)			2020						2019
Deferred tax assets:
Deferred compensation, accrued vacation and other reserves			$	79					$	81
Difference between book and tax basis of property			357						548
Pension and other postretirement benefits			86						86
Equity compensation			10						11
Bad debt reserve			16						13
Derivatives, net			11						—
U.S. Federal net operating loss carryforwards			2,117						2,116
Foreign net operating loss carryforwards			102						105
State net operating loss carryforwards			351						360
Federal and state tax credit carryforwards			384						384
Federal benefit on state uncertain tax positions			4						4
Interest disallowance carryforward per §163(j) of the Tax Act			4						82
Inventory obsolescence			6						7
Other			10						3
Total deferred tax assets			3,537						3,800
Deferred tax liabilities:
Emissions allowances			21						19
Derivatives, net			—						27
Goodwill			29						8
Intangibles amortization (excluding goodwill)			2						15
Equity method investments			156						201
Convertible Debt			16						19
Total deferred tax liabilities			224						289
Total deferred tax assets less deferred tax liabilities			3,313						3,511
Valuation allowance			(266)						(242)
Total net deferred tax assets, net of valuation allowance			$	3,047					$	3,269

Summary of NRG's net deferred tax position

The following table summarizes NRG's net deferred tax position as presented in the consolidated balance sheets:

			As of December 31,
(In millions)			2020						2019
Deferred tax asset			$	3,066					$	3,286
Deferred tax liability			(19)						(17)
Net deferred tax asset			$	3,047					$	3,269

Reconciliation of total amounts of uncertain tax benefits

The following table summarizes uncertain tax benefits activity:

			As of December 31,
(In millions)			2020						2019
Balance as of January 1			$	15					$	26
Increase due to current year positions			3						2
Settlements, payments and statute closure			(3)						(13)
Uncertain tax benefits as of December 31			$	15					$	15

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