UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K/A
 
Amendment No. 1
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):June 30, 2014
 
NRG YIELD, INC.
(Exact name of registrant as specified in its charter)
 
Delaware	 	001-36002	 	46-1777204	
(State or other jurisdiction
of incorporation)	 	(Commission File Number)	 	(IRS Employer Identification No.)	
 
211 Carnegie Center, Princeton, New Jersey 08540
(Address of principal executive offices, including zip code)
 
(609) 524-4500
(Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
Introductory Note
 
As previously reported, on June 30, 2014 NRG Yield, Inc. (“NRG Yield” or the “Company”) completed its previously announced acquisition of (i) 100% of the membership interests of Natural Gas Repowering LLC, which indirectly owns the El Segundo Energy Center, a 550 MW fast-start, gas-fired facility located in Los Angeles County, California (“ El Segundo Energy Center ”), from NRG Gas Development Company, LLC (“ NRG Gas ”), (ii) 100% of the membership interests of NRG Solar Mayfair LLC, which indirectly owns TA High Desert, a 20 MW solar facility located in Los Angeles County, California (“ TA High Desert ”), from NRG Solar PV LLC (“ NRG Solar ” and, together with NRG Gas, the “ Sellers ”), and (iii) 100% of the membership interests of NRG Solar Kansas South Holdings LLC, which indirectly owns Kansas South, a 20 MW solar facility located in Kings County, California (“ Kansas South ”, together with El Segundo and TA High Desert, the “ ROFO Assets ”), pursuant to those certain purchase and sale agreements with the Sellers, each of which are wholly-owned subsidiaries of NRG Energy, Inc. This Current Report on Form 8-K/A (the “ Form 8-K/A ”) amends the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on July 7, 2014 to include the financial statements of the ROFO Assets and the pro forma financial information required by Items 9.01(a) and 9.01(b), respectively, and to include the exhibits under Item 9.01(d) of this Form 8-K/A.
 
Section 9 — Financial Statements and Exhibits
 
Item 9.01. Financial Statements and Exhibits.
 
(a)     Financial Statements of Businesses Acquired.
 
The audited consolidated financial statements of NRG West Holdings LLC (the direct subsidiary of Natural Gas Repowering LLC) and its subsidiaries as of December 31, 2013 and 2012, and for each of the two years in the period ended December 31, 2013, and the unaudited consolidated financial statements of NRG West Holdings LLC and its subsidiaries as of March 31, 2014 and for the three months ended March 31, 2014 and 2013 are attached to this Form 8-K/A as Exhibits 99.1 and 99.2, and are incorporated herein by reference.
 
The audited financial statements of NRG Solar Kansas South LLC for the period from May 13, 2013 (acquisition) to December 31, 2013, and the unaudited financial statements of NRG Solar Kansas South LLC as of March 31, 2014 and for the three months ended March 31, 2014 are attached to this Form 8-K/A as Exhibits 99.3 and 99.4, and are incorporated herein by reference.
 
The audited financial statements of TA High Desert, LLC for the period from March 28, 2013 (acquisition) to December 31, 2013, and the unaudited financial statements of TA High Desert, LLC as of March 31, 2014 and for the three months ended March 31, 2014, are attached to this Form 8-K/A as Exhibits 99.5 and 99.6, and are incorporated herein by reference.
 
(b)     Pro Forma Financial Information.
 
The unaudited pro forma condensed combined consolidated financial statements and explanatory notes relating to the Company’s acquisition of the ROFO Assets are attached as Exhibit 99.7 to this Form 8-K/A and are incorporated herein by reference.
 
2

 
(d)    Exhibits.
 
Exhibit No.	 	Description	
 	 	 	
23.1	 	Consent of KPMG LLP.	
 	 	 	
23.2	 	Consent of KPMG LLP.	
 	 	 	
23.3	 	Consent of KPMG LLP.	
 	 	 	
99.1	 	Audited consolidated financial statements of NRG West Holdings LLC and its subsidiaries as of December 31, 2013 and 2012, and for each of the two years in the period ended December 31, 2013.	
 	 	 	
99.2	 	Unaudited consolidated financial statements of NRG West Holdings LLC and its subsidiaries as of March 31, 2014 and for the three months ended March 31, 2014 and 2013.	
 	 	 	
99.3	 	Audited financial statements of NRG Solar Kansas South LLC for the period from May 13, 2013 (acquisition) to December 31, 2013.	
 	 	 	
99.4	 	Unaudited financial statements of NRG Solar Kansas South LLC as of March 31, 2014 and for the three months ended March 31, 2014.	
 	 	 	
99.5	 	Audited financial statements of TA High Desert, LLC for the period from March 28, 2013 (acquisition) to December 31, 2013.	
 	 	 	
99.6	 	Unaudited financial statements of TA High Desert as of March 31, 2014 and for the three months ended March 31, 2014.	
 	 	 	
99.7	 	Unaudited pro forma condensed combined consolidated financial statements and explanatory notes for the year in the period ended December 31, 2013 and the quarterly period ended March 31, 2014.	
 
* * * * *
 
3

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 	NRG Yield, Inc.	
 	(Registrant)	
 	 	
 	By:	/s/ Brian E. Curci	
 	 	Brian E. Curci	
 	 	Corporate Secretary	
 	 	
Dated: July 18, 2014	 	
 
4

Exhibit 23.1
 
Consent of Independent Auditors
 
The Members
NRG West Holdings, LLC:
 
We consent to the incorporation by reference in the registration statement (No. 333-190071) on Form S-8 of NRG Yield, Inc. of our report dated April 28, 2014, with respect to the consolidated balance sheets of NRG West Holdings, LLC and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of operations and comprehensive income/(loss), member’s equity, and cash flows for the years ended December 31, 2013 and 2012, which report appears in the Form 8-K/A of NRG Yield, Inc.
 
(signed) KPMG LLP
 
Philadelphia, Pennsylvania
July 17, 2014

Exhibit 23.2
 
Consent of Independent Auditors
 
The Member
NRG Solar Kansas South LLC:
 
We consent to the incorporation by reference in the registration statement (No. 333-190071) on Form S-8 of NRG Yield, Inc. of our report dated April 29, 2014, with respect to the balance sheet of NRG Solar Kansas South LLC as of December 31, 2013, and the related statements of operations and comprehensive income, member’s equity, and cash flows for the period from May 13, 2013 (acquisition) to December 31, 2013, which report appears in the Form 8-K/A of NRG Yield, Inc.
 
 (signed) KPMG LLP
 
Philadelphia, Pennsylvania
July 17, 2014

Exhibit 23.3
 
Consent of Independent Auditors
 
The Member
TA-High Desert, LLC:
 
We consent to the incorporation by reference in the registration statement (No. 333-190071) on Form S-8 of NRG Yield, Inc. of our report dated April 29, 2014, with respect to the balance sheet of TA-High Desert, LLC as of December 31, 2013, and the related statements of operations, member’s equity, and cash flows for the period from March 28, 2013 (acquisition) to December 31, 2013, which report appears in the Form 8-K/A of NRG Yield, Inc.
 
(signed) KPMG LLP
 
Philadelphia, Pennsylvania
July 17, 2014

Exhibit 99.1
 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
 
Consolidated Financial Statements
 
December 31, 2013 and 2012
 
(With Independent Auditors’ Report Thereon)

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
 
Table of Contents
 
 	Page(s)	
 	 	
Independent Auditors’ Report	1–2	
 	 	
Consolidated Balance Sheets – December 31, 2013 and 2012	3	
 	 	
Consolidated Statements of Operations and Comprehensive Income/(Loss) – Years ended December 31, 2013 and 2012	4	
 	 	
Consolidated Statements of Member’s Equity – Years ended December 31, 2013 and 2012	5	
 	 	
Consolidated Statements of Cash Flows – Years ended December 31, 2013 and 2012	6	
 	 	
Notes to Consolidated Financial Statements	7–17	

 
Independent Auditors’ Report
 
The Members
NRG West Holdings, LLC and Subsidiaries:
 
We have audited the accompanying consolidated financial statements of NRG West Holdings, LLC and subsidiaries (the Company), which comprise the consolidated balance sheets as of December 31, 2013 and 2012 and the related consolidated statements of operations and comprehensive income/(loss), member’s equity, and cash flows for the year ended December 31, 2013 and 2012, and the related notes to the consolidated financial statements.
 
Management’s Responsibility for the Financial Statements
 
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
 
Auditors’ Responsibility
 
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
 
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also concludes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
 
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 
Opinion
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NRG West Holdings, LLC and subsidiaries as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years ended December 31, 2013 and 2012 in accordance with U.S. generally accepted accounting principles.
 
/s/ KPMG LLP
 
Philadelphia, Pennsylvania
April 28, 2014
 
2

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2013 and 2012
(Amounts in thousands)
 
 	 	2013	 	2012	 	
Assets	 	 	 	 	 	
Current assets:	 	 	 	 	 	
Cash	$	23,677	 	—	 	
Restricted cash	 	5,464	 	500	 	
Accounts receivable	 	10,172	 	43	 	
Notes receivable	 	3,645	 	—	 	
Inventory – spare parts	 	417	 	—	 	
Prepaid assets	 	1,779	 	—	 	
Other current assets	 	7,590	 	—	 	
Total current assets	 	52,744	 	543	 	
Property, plant, and equipment:	 	 	 	 	 	
Construction in progress	 	250	 	532,575	 	
In Service, net of Accumulated depreciation of $7,128, and $0	 	636,079	 	—	 	
Net property, plant, and equipment	 	636,329	 	532,575	 	
Other assets:	 	 	 	 	 	
Intangible assets	 	7,504	 	7,504	 	
Notes receivable	 	13,760	 	15,264	 	
Debt issuance costs, net of accumulated amortization of $3,955 and $2,198	 	16,991	 	18,697	 	
Noncurrent derivative assets	 	7,069	 	—	 	
Other noncurrent assets	 	5,717	 	1,496	 	
Total other assets	 	51,041	 	42,961	 	
Total assets	$	740,114	 	576,079	 	
Liabilities and Member’s Equity	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	
Accounts payable	$	1,997	 	33,679	 	
Accounts payable-affiliate	 	6,438	 	1,452	 	
Current portion of long-term debt	 	33,529	 	—	 	
Derivative instruments	 	7,591	 	6,765	 	
Accrued liabilities	 	1,544	 	3,004	 	
Other current liabilities	 	116	 	—	 	
Total current liabilities	 	51,215	 	44,900	 	
Noncurrent liabilities:	 	 	 	 	 	
Long-term debt	 	477,995	 	349,856	 	
Derivative instruments	 	—	 	17,513	 	
Asset retirement obligation	 	2,719	 	1,663	 	
Total noncurrent liabilities	 	480,714	 	369,032	 	
Total liabilities	 	531,929	 	413,932	 	
Commitments and contingencies (note 8)	 	 	 	 	 	
Member’s equity:	 	 	 	 	 	
Member’s interest	 	188,755	 	188,755	 	
Retained earnings/(deficit)	 	19,951	 	(2,330	)	
Accumulated other comprehensive loss	 	(521	)	(24,278	)	
Total member’s equity	 	208,185	 	162,147	 	
Total liabilities and member’s equity	$	740,114	 	576,079	 	
 
See accompanying notes to consolidated financial statements.
 
3

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income/(Loss)
Years ended December 31, 2013 and 2012
(Amounts in thousands)
 
 	 	2013	 	2012	 	
Operating revenue:	 	 	 	 	 	
Capacity revenue	$	49,151	 	—	 	
Sale of electricity	 	6,834	 	—	 	
Total operating revenue	 	55,985	 	—	 	
Operating costs and expenses:	 	 	 	 	 	
Cost of operations	 	7,287	 	—	 	
Cost of operations – affiliate	 	7,679	 	1,760	 	
ARO accretion	 	200	 	—	 	
Depreciation	 	7,128	 	—	 	
Total operating costs and expenses	 	22,294	 	1,760	 	
Operating income/(loss)	 	33,691	 	(1,760	)	
Other income/(expense):	 	 	 	 	 	
Interest income	 	845	 	882	 	
Interest expense	 	(12,255	)	—	 	
Total other (expense)/income	 	(11,410	)	882	 	
Net income/(loss)	 	22,281	 	(878	)	
Other comprehensive loss:	 	 	 	 	 	
Unrealized gain/(loss) on derivatives	 	23,757	 	(10,963	)	
Other comprehensive income/(loss)	 	23,757	 	(10,963	)	
Comprehensive income/(loss)	$	46,038	 	(11,841	)	
 
See accompanying notes to consolidated financial statements.
 
4

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Statements of Member’s Equity
Years ended December 31, 2013 and 2012
(Amounts in thousands)
 
 	 	 	 	 	 	Accumulated	 	 	 	
 	 	 	 	Retained	 	other	 	Total	 	
 	 	Contributed	 	(deficit)/	 	comprehensive	 	member’s	 	
 	 	capital	 	earnings	 	loss	 	equity	 	
Balance at December 31, 2011	$	188,755	 	(1,452	)	(13,315	)	173,988	 	
Net loss	 	—	 	(878	)	—	 	(878	)	
Unrealized loss on derivatives	 	—	 	—	 	(10,963	)	(10,963	)	
Balance at December 31, 2012	 	188,755	 	(2,330	)	(24,278	)	162,147	 	
Net income	 	—	 	22,281	 	—	 	22,281	 	
Unrealized gain on derivatives	 	—	 	—	 	23,757	 	23,757	 	
Balance at December 31, 2013	$	188,755	 	19,951	 	(521	)	208,185	 	
 
See accompanying notes to consolidated financial statements.
 
5

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 2013 and 2012
(Amounts in thousands)
 
 	 	2013	 	2012	 	
Cash flows from operating activities:	 	 	 	 	 	
Net income/(loss)	$	22,281	 	(878	)	
Adjustments to reconcile net income/(loss) to net cash used in operating activities:	 	 	 	 	 	
Depreciation	 	7,128	 	—	 	
ARO accretion	 	200	 	—	 	
Amortization of deferred financing costs	 	1,756	 	—	 	
Changes in assets and liabilities:	 	 	 	 	 	
Accounts receivable – trade	 	(10,129	)	(43	)	
Prepaid assets	 	(1,779	)	(641	)	
Other current assets	 	(8,007	)	—	 	
Notes Receivable	 	(3,141	)	—	 	
Accounts payable	 	(33,094	)	—	 	
Accounts payable – affiliate	 	4,986	 	—	 	
Accrued expenses and other current liabilities	 	(1,344	)	—	 	
Changes in other noncurrent assets	 	(4,271	)	2	 	
Net cash used in operating activities	 	(25,414	)	(1,560	)	
Cash flows from investing activities:	 	 	 	 	 	
Capital expenditures	 	(107,613	)	(184,367	)	
Expenditures on long-term service agreement	 	—	 	(1,471	)	
Notes receivable – principal	 	—	 	(3,066	)	
Increase in restricted cash	 	(4,964	)	(271	)	
Net cash used in investing activities	 	(112,577	)	(189,175	)	
Cash flows from financing activities:	 	 	 	 	 	
Proceeds from issuance of long-term debt	 	161,668	 	190,775	 	
Payment of debt issuance costs	 	—	 	(40	)	
Net cash provided by financing activities	 	161,668	 	190,735	 	
Net change in cash and cash equivalents	 	23,677	 	—	 	
Cash and cash equivalents at beginning of period	 	—	 	—	 	
Cash and cash equivalents at end of period	$	23,677	 	—	 	
Supplemental Disclosures:	 	 	 	 	 	
Non cash investing activity:	 	 	 	 	 	
Additions to fixed assets for accrued capital expenditures	$	1,412	 	32,923	 	
Cash paid for interest, net of amounts capitalized	 	9,797	 	—	 	
 
See accompanying notes to consolidated financial statements.
 
6

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
(1)                    Nature of Business
 
NRG West Holdings, LLC (West Holdings, or the Company), a Delaware limited liability company, is a wholly owned subsidiary of Natural Gas Repowering LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Gas Development Company, LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Repowering Holdings LLC (NRG RH), a Delaware limited liability company, which is a wholly owned subsidiary of NRG Energy, Inc. (NRG or the Parent).
 
West Holdings, formerly known as NRG Southern California Holdings LLC, was incorporated in the state of Delaware July 18, 2008, for the purpose of developing, procuring, constructing, owning, operating, and managing a combined cycle power plant consisting of two fast start, highly efficient units totaling approximately 550 MW, to be located on a site in El Segundo, Los Angeles County, California, commonly referred to as the El Segundo Energy Center facility (ESEC, or the Facility). The Company’s subsidiaries include the El Segundo Energy Center LLC and the West Procurement Company LLC. These subsidiaries hold certain contractual agreements with respect to the construction of the Facility.
 
The Company entered into an Engineering, Procurement, and Construction Agreement (EPC), with ARB Inc. to engineer, procure, and construct the Facility. The Facility was constructed pursuant to a 10 year, 550 MW power purchase tolling agreement (PPA) with Southern California Edison (SCE). In 2013, the Company completed construction of the Facility. The first and second units reached commercial operations during 2013 and the Company has earned revenues from the Facility, selling the electricity generated into the CAISO market prior to August 1, 2013 and, thereafter, in accordance with the PPA with SCE, an electric utility in central and southern California, for resale to its customers.
 
The Facility achieved commercial operations on August 1, 2013, in accordance with the PPA. Prior to the project’s commercial operations date, the Company was considered a Development Stage Company per Accounting Standards Codification (ASC) 915,  Development Stage Entities . As of August 1, 2013, the Company is no longer considered a Development Stage Company.
 
(2)                    Summary of Significant Accounting Policies
 
(a)                     Principles of Consolidation
 
The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The Financial Accounting Standards Board (FASB) Accounting Standards Codification, or ASC, is the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. The consolidated financial statements include the Company’s accounts and operations and those of its subsidiaries in which the Company has a controlling interest. All significant intercompany transactions and balances have been eliminated in consolidation.
 
(b)                     Cash and Cash Equivalents
 
Cash and cash equivalents include highly liquid investments with an original maturity of three months or less at the time of purchase.
 
(Continued)
 
7

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
(c)                      Restricted Cash
 
Restricted cash consists primarily of funds held to satisfy the requirements of certain of the Company’s contractual agreements. These funds are restricted for capital expenditure payments, per the restrictions of the debt agreement.
 
(d)                     Accounts Receivable-Trade and Allowance for Doubtful Accounts
 
Accounts receivable — trade are reported on the consolidated balance sheet at the invoiced amount adjusted for any write-offs and the allowance for doubtful accounts. The allowance for doubtful accounts is reviewed periodically based on amounts past due and significance. The allowance for doubtful accounts was not material as of December 31, 2013 and 2012.
 
(e)                      Inventory
 
Inventory consists of spare parts and is valued at the lower of weighted average cost or market, unless evidence indicates that the weighted average cost will be recovered with a normal profit in the ordinary course of business. Spare parts inventory are removed when they are used for repairs, maintenance or capital projects.
 
(f)                        Property, Plant, and Equipment
 
Property, plant, and equipment are stated at cost and depreciation will be computed using the straight-line method over the estimated useful lives of the respective assets. See note 3,  Property, Plant, and Equipment , for further discussion.
 
Interest incurred on funds borrowed to finance capital projects was capitalized, until the project under construction reached commercial operations in 2013. The amount of interest capitalized was $11.3 million and $17.0 million for the years ended December 31, 2013 and 2012, respectively.
 
(g)                     Intangible Assets
 
Intangible assets represent contractual rights held by the Company. The Company recognizes specifically identifiable intangible assets when specific rights and contracts are acquired. These intangible assets held by the Company consist of emission allowances with finite lives, which will be amortized on a unit of production basis.
 
(h)                     Note Receivable
 
As part of El Segundo Energy Center’s obligations under its interconnection agreement, the Company paid SCE to construct certain interconnection facilities to allow the Facility to connect to the power grid. A portion of the transmission and interconnection costs plus accrued interest are directly reimbursable over a five-year period in quarterly installments beginning on the quarter after the date of commercial operation. Accordingly, a note receivable was established for these costs, and as of December 31, 2013 and 2012, the balance was $17.4 million and $15.3 million, respectively. The note accrues interest at a variable rate based on Federal Energy Regulatory Commission’s (FERC) regulation at 18 C.F.R.§35.19a(a)(2)(iii), which was 3.25% at December 31, 2013 and 2012. In 2013, the Company received reimbursement of $2.0 million.
 
(Continued)
 
8

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
(i)                        Debt Issuance Costs
 
Debt issuance costs are capitalized and will be amortized as interest expense on a basis that approximates the effective-interest method over the term of the related debt.
 
(j)                        Income Taxes
 
The Company is a wholly owned limited liability company (a disregarded entity) for federal and state income tax purposes. Therefore, federal and state income taxes are assessed at the Parent level. Accordingly, no provision has been made for federal or state income taxes in the accompanying consolidated financial statements.
 
If the Company was a separate tax paying entity, the pro forma tax expense/(benefit) would have been $9.1 million, and $(358) thousand for the years ended December 31, 2013 and 2012. It would have had an assumed valuation allowance of $358 thousand for the year ended December 31, 2012.
 
(k)                     Concentration of Credit Risk
 
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of restricted cash and derivative instruments. Restricted cash is held in a money market fund and invested in treasury and other government securities.
 
The Company sells 100% of the power it generates to a single customer, SCE, through a PPA. At December 31, 2013, the accounts receivable balance with this customer totaled $7.7 million. The maximum amount of loss due to credit risk, should the customer fail to perform, is the amount of outstanding receivables and any losses associated with replacing the customer.
 
(l)                        Revenue Recognition
 
A significant majority of the Company’s revenues are obtained through its PPA with Southern California Edison. This PPA is accounted for as an operating lease in accordance with ASC 840,  Leases  (ASC 840). ASC 840 requires revenues from fixed capacity payments be treated as minimum lease payments to be amortized over the term of the lease. Variable pass-through revenues are treated as contingent rentals and are recorded when the achievement of the contingency becomes probable.
 
(m)                  Derivative Instruments and Hedging Activities
 
The Company accounts for derivatives and hedging activities in accordance with ASC 815, Derivatives and Hedging (ASC 815), which requires entities to recognize all derivative instruments as either assets or liabilities on the consolidated balance sheet at their respective fair values. For derivatives designated in hedging relationships, changes on the fair value are either offset through earnings against the change in fair value of the hedged item attributable to the risk being hedged or recognized in accumulated other comprehensive income (OCI), to the extent the derivative is effective at offsetting the changes in cash flows being hedged until the hedged item affects earnings.
 
The Company only enters into derivative contracts that it intends to designate as a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its risk management objective and strategy for undertaking the hedge,
 
(Continued)
 
9

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. For derivative instruments that are designated and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires or is sold, terminated, or exercised, the cash flow hedge is designated because a forecasted transaction is not probable of occurring, or management determines to remove the designation of the cash flow hedge.
 
In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the consolidated balance sheet and recognizes any subsequent changes in its fair value in earnings. When it is probable that a forecasted transaction will not occur, the Company discontinues hedge accounting and recognizes immediately in earnings gains and losses that were accumulated in OCI related to the hedging relationship. See note 6,  Derivatives Instruments and Hedging Activity , for more information.
 
(n)                     Fair Value Measurements
 
The Company accounts for the fair value of financial instruments in accordance with ASC 820, Fair Value Measurements  (ASC 820). The Company does not hold or issue financial instruments for trading purposes.
 
The carrying amounts of cash, restricted cash, accounts receivable-trade, accounts payable and accounts payable-affiliate approximate their fair value due to the short-term maturity of these instruments and are classified as Level 1 in the fair value hierarchy. The carrying value of debt and notes receivable approximates fair value as the debt and notes receivable carry variable interest rates and their level within the fair value hierarchy is Level 3.
 
Derivative instruments are recorded at fair value on the Company’s balance sheet on a recurring basis and their level within the fair value hierarchy is Level 2.
 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:
 
Level 1 – Quoted prices in active markets for identical assets or liabilities.
 
(Continued)
 
10

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
 
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.
 
(o)                     Asset Retirement Obligations
 
The Company accounts for its asset retirement obligations (AROs), in accordance with ASC 410-20, Asset Retirement Obligations  (ASC 410-20). Retirement obligations associated with long-lived assets included within the scope of ASC 410-20 are those for which a legal obligation exists under enacted laws, statutes, and written or oral contracts, including obligations arising under the doctrine of promissory estoppel, and for which the timing and/or method of settlement may be conditional on a future event. ASC 410-20 requires an entity to recognize the fair value of a liability for an ARO in the period in which it is incurred and a reasonable estimate of fair value can be made.
 
Upon initial recognition of a liability for an ARO, the Company capitalizes the asset retirement cost by increasing the carrying amount of the related long-lived asset by the same amount. Over time, the liability is accreted to its future value, while the capitalized cost is depreciated over the useful life of the related asset.
 
The Company’s ARO liability was $2.7 million and $1.7 million, at December 31, 2013 and 2012, respectively. This represents the present value of the estimated cost of environmental obligations related to site closure for the assets constructed as of December 31, 2013 and 2012, respectively.
 
(p)                     Use of Estimates
 
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period.
 
Actual results may differ from those estimates. Estimates are used for such items as derivative instruments and contingencies, among others.
 
(q)                     Recent Accounting Developments
 
ASU 2013-02 – Effective January 1, 2013, the Company adopted the provisions of ASU No. 2013-02, Other Comprehensive Income (Topic 220) Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income , or ASU No. 2013-02, and began reporting the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income within the notes to the consolidated financial statements if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income in the same reporting period. For other amounts not required by U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures,
 
(Continued)
 
11

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
which provide additional information about the amounts. The provisions of ASU No. 2013-02 are required to be adopted prospectively. As this guidance provides only presentation requirements, the adoption of this standard did not impact the Company’s results of operations, cash flows or financial position.
 
(3)                    Property, Plant, and Equipment
 
Major classes of property, plant, and equipment consist of the following:
 
 	 	December 31	 	Depreciable	 	
 	 	2013	 	2012	 	lives	 	
 	 	(Amounts in thousands)	 	 	 	
Land improvements	$	20,315	 	—	 	20–35 years	 	
Buildings and structures	 	7,539	 	—	 	20 years	 	
Plant equipment	 	572,613	 	—	 	5–35 years	 	
Transmission assets	 	42,740	 	—	 	20–35 years	 	
Construction in progress	 	250	 	532,575	 	 	 	
Total property, plant, and equipment	 	643,457	 	532,575	 	 	 	
Less accumulated depreciation	 	7,128	 	—	 	 	 	
Property, plant, and equipment – net	$	636,329	 	532,575	 	 	 	
 
The Facility achieved commercial operations on August 1, 2013, and transferred the balance in construction in progress to property, plant and equipment.
 
(4)                    Intangible Assets
 
The Company’s intangible assets comprise Nitrogen Oxide Regional Clean Air Incentive Market, or RECLAIM Trading Credits (NOx RTC’s), and Federal Sulfur Dioxide Allowances (SO2 Allowances). As of December 31, 2013 and 2012, none of the NOx RTC’s perpetual block emission allowances had been amortized. The NOx RTC’s discrete 2013 year block, which had a zero dollar carrying value, was utilized to offset emissions for the year ended December 31, 2013. The NOx RTC’s perpetual block will be amortized on a straight-line basis over a 30 year useful life, commensurate with the useful life of the underlying combined cycle power plant, beginning in the first quarter of 2014.
 
(5)                    Debt
 
On August 23, 2011, NRG West Holdings LLC entered into a credit agreement with a group of lenders in respect to the El Segundo Energy Center financing for the construction of the Facility, or the West Holdings Credit Agreement. The West Holdings Credit Agreement establishes a $540 million construction loan facility, in two tranches with additional facilities for the issuance of letters of credit and working capital loans.
 
The two tranche construction loan facility consists of a $480 million Tranche A Construction Facility, or the Tranche A Facility, and a $60 million Tranche B Construction Facility, or the Tranche B Facility. The Tranche A and Tranche B Facilities convert to a term loan at the term conversion date and have interest
 
(Continued)
 
12

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
rates of LIBOR, plus an applicable margin which increases by 0.125% periodically from term conversion through year eight for the Tranche A Facility and increases by 0.125% upon term conversion, on the third and sixth anniversary after term conversion and by 0.25% on the eighth anniversary of the term conversion for the Tranche B Facility. The Tranche A and Tranche B Facilities amortize based upon a predetermined schedule over the term of the loan with the balance payable at maturity in August 2023.
 
The West Holdings Credit Agreement also provides for the issuance of letters of credit and working capital loans to support the El Segundo Energy Center collateral needs. This includes letter of credit facilities on behalf of West Holdings of up to $90 million in support of the PPA, up to $48 million in support of the collateral agent, and a working capital facility, which permits loans or the issuance of letters of credit of up to $10 million.
 
As of December 31, 2013 and 2012, $480 million and $350 million, respectively, had been borrowed under the West Holdings Credit Agreement under the Tranche A Facility. As of December 31, 2013 and 2012, $32 million and $0 million, respectively, had been borrowed under the West Holdings Credit Agreement under the Tranche B Facility. In addition, as of both December 31, 2013 and 2012, $33 million had been issued in letters of credit in support of the PPA, and as of December 31, 2013 and 2012, $1 million and $6 million, respectively, had been issued in letters of credit under the working capital facility. Subsequent to the year-end, the Company drew down approximately $28 million under the NRG West Holdings LLC Credit Agreement, with no additional draws on letters of credit in support of the PPA, nor additional draws on letters of credit under the working capital facility.
 
Long-term debt consisted of the following:
 
 	 	 	 	 	 	Current	 	
 	 	December 31	 	interest rate	 	
 	 	2013	 	2012	 	percentage (a)	 	
 	 	(In thousands, except rates)	 	 	 	
Senior secured term loan, due 2023 “B”	$	33,529	 	—	 	L+2.875	 	
Senior secured term loan, due 2023 “A”	 	477,995	 	349,856	 	L+2.250	 	
Total	$	511,524	 	349,856	 	 	 	

(a)  L+equals London Inter-Bank Offered Rate (LIBOR) plus x%.
 
(Continued)
 
13

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
The following table summarizes the principal maturities of the Company’s debt as of December 31, 2013 (amounts in thousands):
 
 	 	Debt	 	
 	 	maturities	 	
Year ending December 31,	 	 	 	
2014	 	$	33,529	 	
2015	 	35,908	 	
2016	 	40,796	 	
2017	 	41,180	 	
2018	 	46,944	 	
Thereafter	 	313,166	 	
 	 	$	511,524	 	
 
(6)                    Derivative Instruments and Hedging Activity
 
(a)                     Interest Rate Swaps
 
In accordance with the Financing Agreement, see note 5, Debt, on October 18, 2011, the Company entered into a series of fixed for floating interest rate swaps for 75% of the outstanding Tranche A and Tranche B Facilities amounts, intended to hedge the risks associated with floating interest rates. The Company will pay its counterparty the equivalent of 2.417% fixed interest payment on a predetermined notional value, and the Company will receive quarterly the equivalent of a floating interest payment based on a three-month LIBOR from December 31, 2013 through the term loan maturity date. The original notional amount of the swap, which became effective November 30, 2011, and matures on August 31, 2023, was $135 million and will increase and amortize in proportion to the loan. As of December 31, 2013 and 2012, the notional amount of the swap was $405 million and $328 million, respectively.
 
(b)                     Accumulated Other Comprehensive Loss (OCL)
 
The following table summarizes the effects of the swaps on the Company’s accumulated other comprehensive loss (OCL) balance, which reflects the change in fair value of the swaps described above (amounts in thousands):
 
Accumulated OCL balance as at December 31, 2011	 	$	(13,315	)	
Mark-to-market of cash flow hedge accounting contracts	 	(10,963	)	
Accumulated OCL balance as at December 31, 2012	 	(24,278	)	
Mark-to-market of cash flow hedge accounting contracts	 	23,757	 	
Accumulated OCL balance as at December 31, 2013	 	$	(521	)	
 
There was no ineffectiveness recorded for the year ended December 31, 2013 or 2012 related to the swaps.
 
(Continued)
 
14

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
As of December 31, 2013, $7.6 million of deferred losses accumulated in OCL are expected to be reclassified to earnings during the next 12 months.
 
(7)                    Related-Party Transactions
 
On February 23, 2011, ESEC entered into a purchase and sale agreement with El Segundo Power LLC, a wholly owned subsidiary of NRG for NOx RTC’s and SO2 Allowances. ESEC paid $7.5 million for the aggregate quantity of NOx RTC’s and SO2 Allowances.
 
On March 31, 2011 NRG El Segundo Operations, Inc., a wholly owned subsidiary of NRG, executed an Operations & Management (O&M) agreement with ESEC to manage, operate and maintain the Facility for an initial term of ten years following the commercial operations date and automatically renewed by an additional five years under the same terms and conditions upon written notice 120 days prior to the expiration of the initial term. No work was performed under this agreement prior to 2012. For the year ended December 31, 2013 and 2012, the Company recorded $2.3 million and $1.3 million, respectively, to construction in progress related to this agreement. The Company also incurred costs under this agreement of $2.4 million related to the cost of operations.
 
On March 31, 2011, ESEC executed an easement agreement with El Segundo Power II, LLC, a wholly owned subsidiary of NRG, for a parcel of real property located in the city of El Segundo, California. The easement is for the construction, operation, and maintenance of sewer lines as well as for the construction, operations, and maintenance of right of way and facilities for lay-down and staging areas for the project. The term of the agreement will be over the life of the project. For the years ended December 31, 2013 and 2012, the Company recorded $265 thousand and $257 thousand, respectively, in lease expense related to this agreement.
 
On March 31, 2011, ESEC executed a license agreement with Long Beach Generation LLC, a wholly owned subsidiary of NRG, for a parcel of real property located in Long Beach, California. This license agreement permits ESEC to utilize certain areas owned by Long Beach Generation LLC for the purpose of accessing the site and performing staging activities primarily for storage and maintenance of equipment and parts in connection with the construction, operation, and maintenance of the project. The term of the agreement is for three years. For the years ended December 31, 2013 and 2012, the Company recorded $51 thousand and $51 thousand, respectively, in lease expense related to this agreement.
 
On March 31, 2011, ESEC executed a ground lease and easement agreement with El Segundo Power, LLC, a wholly owned subsidiary of NRG, for a parcel of real property in the city of El Segundo, California. The easement is for the construction, operation, and maintenance of electrical and gas lines as well as for the construction, operations, and maintenance of certain utility lines, certain sanitary, and wastewater discharge for the project. The term of the agreement will be over the construction of the project through to the commercial operations date. For the years ended December 31, 2013 and 2012, the Company recorded $1.2 million and $1.1 million, respectively, in lease expense related to this agreement.
 
On March 31, 2011, ESEC executed a construction management services agreement with NRG Construction Services LLC, a wholly owned subsidiary of NRG to act as construction manager of the project to manage the design, engineering, procurement and construction, commissioning, testing initial start-up and closeout of construction activities for the Facility. As of December 31, 2013 and 2012, the
 
(Continued)
 
15

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
Company had recorded approximately $4.2 million and $4.3 million, respectively, in construction in progress for construction management services from NRG Construction LLC.
 
On March 31, 2011, ESEC executed a project administration services agreement with NRG West Coast LLC, a wholly owned subsidiary of NRG, to perform certain administrative functions for an initial term of ten years following the placed-in-service date and automatically renewed for successive three year periods under the same terms unless terminated upon written notice at least 120 days prior to the scheduled expiration of the agreement. As of December 31, 2013 and 2012, the Company had recorded $310 thousand and $531 thousand, respectively. The 2012 amount included $225 thousand related to services performed during 2011, in general and administrative expense related to this agreement.
 
On March 31, 2011, ESEC executed an energy marketing services agreement with NRG Power Marketing LLC, a wholly owned subsidiary of NRG to procure fuel and market capacity, energy and ancillary output of the Facility prior to the start of the SCE PPA. For the year ended December 31, 2013, the Company had recorded $12.4 million in energy costs related to this agreement of which $8.7 million was recorded to construction in progress.
 
(8)                    Commitments and Contingencies
 
In the normal course of business, the Company is subject to various claims and litigation. Management of the Company expects that these various litigation items will not have a material adverse effect on the results of operations, cash flows, or financial position of the Company.
 
Power Purchase Agreement— On March 5, 2008, ESEC entered into a PPA with SCE to deliver up to 550 MW of natural gas-fired electric energy output generated by the Facility for a period of ten years. This PPA was subsequently amended and restated to, among other changes, extend the project’s expected initial delivery date by 26 months and related termination rights in the original agreement to accommodate a delay in obtaining permits as well as adjusts the monthly capacity. In addition, it modified the original agreement to address changes to applicable tariff and regulations and the market redesign and technology upgrade that went into effect on April 1, 2009.
 
Long-Term Services Agreement (LTP)— On February 11, 2011, ESEC entered into a LTP agreement with Siemens Energy to provide program parts, miscellaneous hardware, program management services and scheduled outage services to maintain the combustion turbines for the earlier of 100,000 fired hours, 3,600 starts or 28 years from effective date. The Company is obligated to make annual payments of $200 thousand as a fixed annual fee, beginning at first fire. In addition, the Company is obligated to pay a variable fee based on fired hours or starts plus a program initialization fee as defined per the agreement. The Company made variable payments of $4.2 million and $1.5 million as of December 31, 2013 and 2012, respectively.
 
Construction Management Agreement— Pursuant to the construction management agreement discussed above, the Company is obligated, commencing on the notice to proceed date and through the commercial operations date, to make payments to NRG Construction Services LLC of $250 thousand per calendar year as home office management fees and $4 million per calendar year as project site management fees. In addition, the Company has committed to make payments to NRG Construction Services LLC for additional services on either a lump-sum basis or on a time and materials basis at standard rates set forth in the agreement.
 
(Continued)
 
16

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013 and 2012
 
Operations & Management (O&M) Agreement— Pursuant to the O&M agreement with NRG El Segundo Operations, Inc. as discussed in note 8,  Related-Party Transaction , the Company is obligated to make annual payments of $300 thousand as a fixed fee for O&M services, upon commencement of commercial operations. In addition, the Company is obligated to reimburse NRG El Segundo Operations, Inc. for mobilization services, costs of parts and other additional services pursuant to a statement of work as defined per the agreement.
 
Easement, Ground Lease and License Agreements— The Company has entered in a number of agreements relating to easements and right-of-way relating to the construction, operation, and maintenance of the project. See note 8, Related-Party Transactions , for a further discussion.
 
(9)                   Supplemental Cash Flow Information
 
The Company had noncash additions in construction in progress of $1.4 million and $3.4 million as of December 31, 2013 and 2012, respectively. The Company paid interest, net of amount capitalized, of $9.8 million in 2013.
 
(10)             Subsequent Events
 
These consolidated financial statements and notes reflect the Company’s evaluation of events occurring subsequent to the balance sheet date through April 28, 2014, the date that the consolidated financial statements are available to be issued.
 
(Continued)
 
17

Exhibit 99.2
 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
 
Consolidated Financial Statements
(unaudited)
 
March 31, 2014

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in thousands)
 
 	 	As of	 	As of	 	
 	 	March 31, 2014	 	December 31, 2013	 	
 	 	(Unaudited)	 	 	 	
Assets	 	 	 	 	 	
Current assets:	 	 	 	 	 	
Cash	 	$	12,139	 	23,677	 	
Restricted cash	 	11,323	 	5,464	 	
Accounts receivable	 	4,439	 	10,172	 	
Notes receivable	 	3,645	 	3,645	 	
Inventory - spare parts	 	375	 	417	 	
Prepaid assets	 	1,476	 	1,779	 	
Other current assets	 	22,283	 	7,590	 	
Total current assets	 	55,680	 	52,744	 	
Property, plant, and equipment:	 	 	 	 	 	
Construction in progress	 	—	 	250	 	
In service, net of accumulated depreciation of $12,486, and $7,128	 	630,408	 	636,079	 	
Net property, plant, and equipment	 	630,408	 	636,329	 	
Other assets:	 	 	 	 	 	
Intangible assets	 	7,504	 	7,504	 	
Notes receivable	 	12,946	 	13,760	 	
Debt issuance costs, net of accumulated amortization of $4,394 and $3,955	 	16,650	 	16,991	 	
Non-current derivative assets	 	3,553	 	7,069	 	
Other noncurrent assets	 	7,841	 	5,717	 	
Total other assets	 	48,494	 	51,041	 	
Total assets	 	734,582	 	740,114	 	
Liabilities and Member’s Equity	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	
Accounts payable	 	1,066	 	1,997	 	
Accounts payable-affiliate	 	10,173	 	6,438	 	
Current portion of long term debt	 	35,422	 	33,529	 	
Derivative instruments	 	7,639	 	7,591	 	
Accrued liabilities	 	2,195	 	1,544	 	
Other current liabilities	 	189	 	116	 	
Total current liabilities	 	56,684	 	51,215	 	
Noncurrent liabilities:	 	 	 	 	 	
Long-term debt	 	484,278	 	477,995	 	
Asset retirement obligation	 	2,776	 	2,719	 	
Total noncurrent liabilities	 	487,054	 	480,714	 	
Total liabilities	 	543,738	 	531,929	 	
Commitments and contingencies	 	 	 	 	 	
Member’s equity:	 	 	 	 	 	
Member’s interest	 	165,114	 	188,755	 	
Retained earnings	 	29,815	 	19,951	 	
Accumulated other comprehensive loss	 	(4,085	)	(521	)	
Total member’s equity	 	190,844	 	208,185	 	
Total liabilities and member’s equity	 	$	734,582	 	740,114	 	
 
See accompanying notes to consolidated financial statements.

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
Three Months ended March 31, 2014 and 2013
(Unaudited)
(Amounts in thousands)
 
 	 	Three Months Ended March 31,	 	
 	 	2014	 	2013	 	
 	 	 	 	 	 	
Operating Revenue:	 	 	 	 	 	
Operating revenue	 	$	27,611	 	—	 	
Total operating revenue	 	27,611	 	—	 	
Operating costs and expenses:	 	 	 	 	 	
Cost of operations	 	3,545	 	407	 	
Cost of operations - affiliate	 	2,226	 	22	 	
ARO accretion	 	56	 	38	 	
Depreciation	 	5,358	 	13	 	
Total operating costs and expenses	 	11,185	 	480	 	
Operating income/(loss)	 	16,426	 	(480	)	
Other income/(expense):	 	 	 	 	 	
Interest (expense)/income	 	(20	)	141	 	
Interest expense	 	(6,542	)	—	 	
Total other (expense)/income	 	(6,562	)	141	 	
Net income/(loss)	 	9,864	 	(339	)	
Other comprehensive (loss)/income:	 	 	 	 	 	
Unrealized (loss)/income on derivatives	 	(3,564	)	3,398	 	
Other comprehensive (loss)/income	 	(3,564	)	3,398	 	
Comprehensive income	 	$	6,300	 	3,059	 	
 
See accompanying notes to consolidated financial statements.

 
NRG WEST HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months ended March 31, 2014 and 2013
(Unaudited)
(Amounts in thousands)
 
 	 	Three Months Ended March 31,	 	
 	 	2014	 	2013	 	
Cash flows from operating activities:	 	 	 	 	 	
Net income/(loss)	 	$	9,864	 	(339	)	
Adjustments to reconcile net income/(loss) to net cash used in operating activities:	 	 	 	 	 	
Depreciation	 	5,358	 	13	 	
ARO accretion	 	56	 	38	 	
Amoritzation of deferred financing costs	 	440	 	 	 	
Changes in assets and liabilities:	 	 	 	 	 	
Accounts receivable — trade	 	5,733	 	—	 	
Prepayments and other current assets	 	(14,348	)	(229	)	
Accounts payable	 	(931	)	—	 	
Accounts payable — affiliate	 	3,735	 	—	 	
Accrued expenses and other current liabilities	 	724	 	652	 	
Changes in other noncurrent assets	 	(1,309	)	—	 	
Net cash provided by in operating activities	 	9,322	 	135	 	
Cash flows from investing activities:	 	 	 	 	 	
Capital expenditures	 	563	 	(57,399	)	
Increase in restricted cash	 	(5,859	)	—	 	
Net cash used in investing activities	 	(5,296	)	(57,399	)	
Cash flows from financing activities:	 	 	 	 	 	
Proceeds from issuance of long-term debt	 	8,176	 	57,274	 	
Distributions	 	(23,641	)	—	 	
Payment of debt issuance costs	 	(99	)	(10	)	
Net cash (used in)/provided by financing activities	 	(15,564	)	57,264	 	
Net change in cash and cash equivalents	 	(11,538	)	—	 	
Cash and cash equivalents at beginning of period	 	23,677	 	—	 	
Cash and cash equivalents at end of period	 	$	12,139	 	—	 	
 
See accompanying notes to consolidated financial statements.

 
Notes to Unaudited Consolidated Financial Statements
 
(1)  Nature of Business
 
NRG West Holdings, LLC (West Holdings, or the Company), a Delaware limited liability company, is a wholly owned subsidiary of Natural Gas Repowering LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Gas Development Company, LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Repowering Holdings LLC (NRG RH), a Delaware limited liability company, which is a wholly owned subsidiary of NRG Energy, Inc. (NRG or the Parent).
 
West Holdings, formerly known as NRG Southern California Holdings LLC, was incorporated in the state of Delaware July 18, 2008, for the purpose of developing, procuring, constructing, owning, operating, and managing a combined cycle power plant consisting of two fast start, highly efficient units totaling approximately 550 MW, to be located on a site in El Segundo, Los Angeles County, California, commonly referred to as the El Segundo Energy Center facility (ESEC, or the Facility). The Company’s subsidiaries include the El Segundo Energy Center LLC and the West Procurement Company LLC. These subsidiaries hold certain contractual agreements with respect to the construction of the Facility.
 
The Company entered into an Engineering, Procurement, and Construction Agreement (EPC), with ARB Inc. to engineer, procure, and construct the Facility. The Facility was constructed pursuant to a 10 year, 550 MW power purchase tolling agreement (PPA) with Southern California Edison (SCE). In 2013, the Company completed construction of the Facility. The first and second units reached commercial operations during 2013 and the Company has earned revenues from the Facility, selling the electricity generated into the CAISO market prior to August 1, 2013 and, thereafter, in accordance with the PPA with SCE, an electric utility in central and southern California, for resale to its customers.
 
The Facility achieved commercial operations on August 1, 2013, in accordance with the PPA.
 
The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company’s consolidated annual financial statements. Interim results are not necessarily indicative of results for a full year.
 
(2)  Derivative Instruments and Hedging Activity
 
The Company has a series of fixed for floating interest rate swaps for 75% of its Tranche A and Tranche B Facilities amounts. The notional amount of the swaps was $390 million as of March 31, 2014. The following table summarizes the effects of the swap on the Company’s accumulated OCI balance, which reflects the change in the fair value of the swaps as they are accounted for as cash flow hedges (amounts in thousands):
 
Accumulated OCL balance as at December 31, 2013	 	$	(521	)	
 	 	 	 	
Mark-to-market of cash flow hedge accounting contracts	 	(3,564	)	
 	 	 	 	
Accumulated OCL balance as at March 31, 2014	 	$	(4,085	)	
 
(3)   Subsequent Events
 
These financial statements and notes reflect the Company’s evaluation of events occurring subsequent to the balance sheet date through July 17, 2014, the date that the financial statements are available to be issued.

Exhibit 99.3
 
NRG SOLAR KANSAS SOUTH LLC
 
Financial Statements
 
December 31, 2013
 
(With Independent Auditors’ Report Thereon)

 
NRG SOLAR KANSAS SOUTH LLC
 
Table of Contents
 
 	Page(s)	
 	 	
Independent Auditors’ Report	1–2	
 	 	
Balance Sheet	3	
 	 	
Statement of Operations and Comprehensive Income – Period from May 13, 2013 (acquisition) to December 31, 2013	4	
 	 	
Statement of Member’s Equity – Period from May 13, 2013 (acquisition) to December 31, 2013	5	
 	 	
Statement of Cash Flows – Period from May 13, 2013 (acquisition) to December 31, 2013	6	
 	 	
Notes to Financial Statements	7–15	

 
Independent Auditors’ Report
 
The Member
NRG Solar Kansas South LLC:
 
We have audited the accompanying financial statements of NRG Solar Kansas South LLC, which comprise the balance sheet as of December 31, 2013, and the related statements of operations and comprehensive income, member’s equity, and cash flows for the period from May 13, 2013 (acquisition) to December 31, 2013, and the related notes to the financial statements.
 
Management’s Responsibility for the Financial Statements
 
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; 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.
 
Auditors’ Responsibility
 
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
 
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
 
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 
Opinion
 
In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of NRG Solar Kansas South LLC as of December 31, 2013, and the results of its operations and its cash flows for the period from May 13, 2013 (acquisition) to December 31, 2013, in accordance with U.S. generally accepted accounting principles.
 
/s/ KPMG LLP
 
Philadelphia, Pennsylvania
April 29, 2014
 
2

 
NRG SOLAR KANSAS SOUTH LLC
Balance Sheet
December 31, 2013
(Amounts in thousands)
 
Assets	 	 	 	
Current assets:	 	 	 	
Restricted cash	 	$	3,483	 	
Accounts receivable — trade	 	225	 	
Prepaid assets	 	22	 	
Renewable energy grant receivable	 	21,115	 	
Total current assets	 	24,845	 	
Property, plant, and equipment:	 	 	 	
Property, plant, and equipment	 	51,533	 	
Less accumulated depreciation	 	(1,277	)	
Net property, plant, and equipment	 	50,257	 	
Other assets:	 	 	 	
Notes receivable	 	369	 	
Derivative assets	 	2,161	 	
Other noncurrent assets	 	272	 	
Total assets	 	$	77,904	 	
Liabilities and Member’s Equity	 	 	 	
Current liabilities:	 	 	 	
Current portion of long-term debt	 	$	23,326	 	
Accounts payable — trade	 	103	 	
Derivative liabilities	 	539	 	
Other current liabilities	 	3,770	 	
Total current liabilities	 	27,738	 	
Other liabilities:	 	 	 	
Long-term debt	 	34,606	 	
Total liabilities	 	62,344	 	
Commitment and contingencies (note 8)	 	 	 	
Member’s equity:	 	 	 	
Contributed capital	 	14,464	 	
Accumulated deficit	 	(526	)	
Accumulated other comprehensive income	 	1,622	 	
Total member’s equity	 	15,560	 	
Total liabilities and member’s equity	 	$	77,904	 	
 
See accompanying notes to financial statements.
 
3

 
NRG SOLAR KANSAS SOUTH LLC
Statement of Operations and Comprehensive Income
Period from May 13, 2013 (acquisition) to December 31, 2013
(Amounts in thousands)
 
Operating revenue:	 	 	 	
Sales of electricity	 	$	2,523	 	
Total operating revenue	 	2,523	 	
Operating costs and expenses:	 	 	 	
Cost of operations	 	482	 	
Depreciation expense	 	1,277	 	
Total operating costs and expenses	 	1,759	 	
Operating income	 	764	 	
Other expense, net:	 	 	 	
Interest expense	 	1,290	 	
Total other expense, net	 	1,290	 	
Net loss	 	(526	)	
Other comprehensive income:	 	 	 	
Unrealized gain on derivatives	 	1,622	 	
Other comprehensive income	 	1,622	 	
Comprehensive income	 	$	1,096	 	
 
See accompanying notes to financial statements.
 
4

 
NRG SOLAR KANSAS SOUTH LLC
Statement of Member’s Equity
Period from May 13, 2013 (acquisition) to December 31, 2013
(Amounts in thousands)
 
 	 	 	 	 	 	Accumulated	 	 	 	
 	 	 	 	 	 	other	 	Total	 	
 	 	Contributed	 	Accumulated	 	comprehensive	 	member’s	 	
 	 	capital	 	deficit	 	income	 	equity	 	
Balance at May 13, 2013	$	20,534	 	—	 	—	 	20,534	 	
Net loss	 	—	 	(526	)	—	 	(526	)	
Unrealized loss on derivatives	 	—	 	—	 	1,622	 	1,622	 	
Capital contributions from Parent	 	130	 	—	 	—	 	130	 	
Noncash dividend to Parent	 	(6,200	)	—	 	—	 	(6,200	)	
Balance at December 31, 2013	$	14,464	 	(526	)	1,622	 	15,560	 	
 
See accompanying notes to financial statements.
 
5

 
NRG SOLAR KANSAS SOUTH LLC
Statement of Cash Flows
Period from May 13, 2013 (acquisition) to December 31, 2013
(Amounts in thousands)
 
Cash flows from operating activities:	 	 	 	
Net loss	 	$	(526	)	
Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	
Depreciation expense	 	1,277	 	
Changes in assets and liabilities:	 	 	 	
Accounts receivable — trade	 	(225	)	
Prepaid assets	 	(22	)	
Accounts payable — trade	 	(200	)	
Other current liabilities	 	(1,400	)	
Net cash used in operating activities	 	(1,096	)	
Cash flows from investing activities:	 	 	 	
Capital expenditures	 	(7,144	)	
Increase in restricted cash	 	(3,352	)	
Net cash used in investing activities	 	(10,496	)	
Cash flows from financing activities:	 	 	 	
Proceeds from issuance of debt	 	12,457	 	
Payment of term loan	 	(995	)	
Capital contributions	 	130	 	
Net cash provided by financing activities	 	11,592	 	
Net change in cash and cash equivalents	 	—	 	
Cash and cash equivalents, beginning of year	 	—	 	
Cash and cash equivalents, end of year	 	$	—	 	
Supplemental disclosure:	 	 	 	
Interest paid	 	$	945	 	
Noncash investing activities:	 	 	 	
Reduction of fixed assets for deferred tax asset	 	$	6,200	 	
Reduction of fixed assets for renewable energy grant, net of sequestration reserve	 	21,115	 	
Noncash financing activities:	 	 	 	
Dividend to Parent	 	$	6,200	 	
 
See accompanying notes to financial statements.
 
6

 
NRG SOLAR KANSAS SOUTH LLC
Notes to Financial Statements
December 31, 2013
 
(1)                    Nature of Business
 
NRG Solar Kansas South LLC (Kansas South or the Company), a Delaware limited liability company, is a wholly owned subsidiary of NRG Solar Kansas South Holdings LLC (Kansas South Holdings), a Delaware limited liability company, a wholly owned subsidiary of NRG Solar PV LLC (Solar PV), a Delaware limited liability company, a wholly owned subsidiary of NRG Solar LLC (NRG Solar), a Delaware limited liability company, a wholly owned subsidiary of NRG Repowering Holdings LLC, a Delaware limited liability company, a wholly owned subsidiary of NRG Energy, Inc. (NRG or the Parent).
 
The Company, along with Kansas South Holdings, was originally a wholly owned subsidiary of Recurrent Energy Development Holdings, LLC (Recurrent) and was organized to develop, design, construct, own, and operate the 20 MW Kansas South photovoltaic solar generating facility located near Stratford, California (the Facility). In February 2013, Solar PV entered into a purchase and sale agreement with Recurrent to acquire 100% of the equity interest in the Company. The acquisition was completed on May 13, 2013.  See note 3,  Business Acquisition , for further information regarding the purchase of Kansas South.
 
In June 2011, the Company entered into a 20-year solar project power purchase agreement (PPA) to provide solar-generated electricity to Pacific Gas and Electric (PG&E). See note 8,  Commitments and Contingencies  for further information regarding the PPA.
 
The construction of the Facility was completed and commercial operations commenced on June 7, 2013.
 
(2)                    Summary of Significant Accounting Policies
 
The financial statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
 
(a)                     Restricted Cash
 
Restricted cash consists primarily of funds held to satisfy the requirements of the Company’s debt agreement. These funds are restricted for current debt service payments and other operating costs, per the restrictions of the debt agreement.
 
(b)                     Accounts Receivable — Trade
 
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. There was no allowance for doubtful accounts as of December 31, 2013.
 
(c)                      Property, Plant, and Equipment
 
Property, plant, and equipment are stated at cost. Significant additions or improvements extending asset lives are capitalized, while repairs and maintenance, including planned major maintenance, are charged to expense as incurred. Depreciation is computed using the straight-line method over the remaining useful lives of the assets. The assets and related accumulated depreciation amounts are adjusted for asset retirements and disposals with the resulting gain or loss included in operations.
 
(Continued)
 
7

 
NRG SOLAR KANSAS SOUTH LLC
Notes to Financial Statements
December 31, 2013
 
(d)                     Impairment of Long-Lived Assets
 
Long-lived assets that are held and used are reviewed for impairment whenever events or changes in circumstances indicate carrying values may not be recoverable. Such reviews are performed in accordance with Accounting Standards Codification (ASC) 360,  Property, Plant, and Equipment  (ASC 360). An impairment loss is recognized if the total future estimated undiscounted cash flows expected from an asset are less than its carrying value. An impairment charge is measured by the difference between an asset’s carrying amount and fair value with the difference recorded in operating costs and expenses in the statement of operations and comprehensive income. Fair values are determined by a variety of valuation methods, including appraisals, sales prices of similar assets, and present value techniques. There have been no indicators of impairment as of December 31, 2013.
 
(e)                      Income Taxes
 
The Company is a wholly owned limited liability company (a disregarded entity) for federal and state income tax purposes. Therefore, federal and state income taxes are assessed at the Parent level. Accordingly, no provision has been made for federal or state income taxes in the accompanying financial statements. If the Company was a tax paying entity, pro forma tax benefit would be approximately $214 thousand for the year ended December 31, 2013.
 
(f)                        Revenue Recognition
 
All of the Company’s revenue is recognized as billable under the provisions of the PPA for energy with Pacific Gas and Electric Company, which has a term of 20 years. Revenue recognized under the PPA is calculated based on power output and established prices, as defined in the PPA. The PPA is recorded as an operating lease in accordance with ASC 840,  Leases  (ASC 840). ASC 840 requires minimum lease payments to be amortized over the term of the lease and contingent rentals are recorded when the achievement of the contingency becomes probable. The Company’s lease has no minimum lease payments. All rent is recorded as contingent rent on an actual basis when the electricity is delivered.
 
(g)                     Commitments and Contingencies
 
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change.
 
(h)                     Derivative Instruments and Hedging Activities
 
The Company accounts for derivatives and hedging activities in accordance with ASC 815, Derivatives and Hedging (ASC 815), which requires entities to recognize all derivative instruments as either assets or liabilities on the balance sheet at their respective fair values. For derivatives designated in hedging relationships, changes in the fair value are either offset through earnings against the change in fair value of the hedged item or recognized in accumulated other
 
(Continued)
 
8

 
NRG SOLAR KANSAS SOUTH LLC
Notes to Financial Statements
December 31, 2013
 
comprehensive income (OCI), to the extent the derivative is effective at offsetting the changes in cash flows being hedged until the hedged item affects earnings.
 
The Company only enters into derivative contracts that it intends to designate as a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness. The Company also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions. For derivative instruments that are designated and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer effective in offsetting cash flows attributable to the hedged risk, the derivative expires or is sold, terminated, or exercised, the cash flow hedge is dedesignated because a forecasted transaction is not probable of occurring, or management determines to remove the designation of the cash flow hedge.
 
In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the Company continues to carry the derivative at its fair value on the balance sheet and recognizes any subsequent changes in its fair value in earnings. When it is probable that a forecasted transaction will not occur, the Company discontinues hedge accounting and recognizes immediately in earnings any gains and losses that were accumulated in OCI related to the hedging relationship. See note 6,  Derivatives Instruments and Hedging Activity , for more information.
 
(i)                        Concentration of Credit Risk
 
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of restricted cash, accounts receivable — trade, renewable energy grant receivable, notes receivable, accounts payable — trade, and derivative instruments. Restricted cash is held in a money market fund and invested in treasury and other government securities. The Company is exposed to credit losses in the event of noncompliance by counterparties on its derivative financial instruments.
 
The Company sells 100% of the power it generates to a single customer, Pacific Gas and Electric, through a PPA. At December 31, 2013, the accounts receivable with this customer totaled $225 thousand. The maximum amount of loss due to credit risk, should the customer fail to perform, is the amount of the outstanding receivable, and any losses associated with replacing this customer.
 
(Continued)
 
9

 
NRG SOLAR KANSAS SOUTH LLC
Notes to Financial Statements
December 31, 2013
 
(j)                        Fair Value Measurements
 
The Company accounts for the fair value of financial instruments in accordance with ASC 820, Fair Value Measurements  (ASC 820). The Company does not hold or issue financial instruments for trading purposes.
 
For restricted cash, accounts receivable — trade, renewable energy grant receivable, and accounts payable — trade, the carrying amount approximates fair value because of the short-term maturity of those instruments and is classified as Level 1 within the fair value hierarchy.
 
Derivative instruments are recorded at fair value on the Company’s balance sheet on a recurring basis and are classified as Level 2 within the fair value hierarchy.
 
The carrying value of notes receivable and long-term debt approximate fair value as the notes receivable and long-term debt carry a variable interest rate and are classified as Level 3 in the fair value hierarchy.
 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:
 
Level 1 — Quoted prices in active markets for identical assets or liabilities.
 
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
 
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.
 
(k)                     Use of Estimates
 
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results may differ from those estimates. Estimates are used for such items as derivative instruments, impairment of long-lived assets, and contingencies, among others.
 
(l)                        Recent Accounting Developments
 
ASU 2013-02 — In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2013-02,  Other Comprehensive Income (Topic 220) Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income , or ASU No. 2013-02. The amendments in ASU No. 2013-02 require the Company to report the effect of significant
 
(Continued)
 
10

 
NRG SOLAR KANSAS SOUTH LLC
Notes to Financial Statements
December 31, 2013
 
reclassifications out of accumulated other comprehensive income on the respective line items in net income, either on the face of the income statement or in the notes, if the amount being reclassified is required to be reclassified in its entirety to net income in the same reporting period. For other amounts not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures, which provide additional information about these amounts. The Company adopted this guidance on January 1, 2013. As this guidance provides only presentation requirements, the adoption of this standard did not impact the Company’s results of operations, cash flows, or financial position.
 
(3)                    Business Acquisition
 
On May 13, 2013, Solar PV acquired 100% of the equity interest in the Company for $20.5 million. The acquisition was accounted for by Solar PV using acquisition accounting and through the application of “push-down” accounting, the purchase price paid by Solar PV was allocated to the Company’s assets, liabilities and equity as of the acquisition date.  Accordingly, the Company recorded the identifiable assets acquired and liabilities assumed at their estimated fair values on the acquisition date, while transaction costs associated with the acquisition were expensed as incurred. At December 31, 2013, the initial accounting for the business combination was not complete because additional information still needs to be received.
 
The following table summarizes the provisional values assigned to the net assets acquired as of the acquisition date (in thousands):
 
Assets:	 	 	 	
Restricted cash	 	$	131	 	
Property, plant, and equipment	 	71,705	 	
Deposits	 	272	 	
Note receivable	 	369	 	
Total assets	 	72,477	 	
Liabilities:	 	 	 	
Accounts payable	 	303	 	
Accrued expenses	 	5,170	 	
Current portion of long-term debt	 	23,326	 	
Long-term debt	 	23,145	 	
Total liabilities	 	51,944	 	
Net assets acquired	 	$	20,533	 	
 
The provisional fair values of the property, plant, and equipment and PPA acquired at the acquisition date were measured primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement as defined in ASC 820. Significant considerations in determining fair value measurements as defined in ASC 820 of the assets acquired and liabilities assumed are as follows:
 
·                              Property, plant, and equipment — The fair values of property, plant, and equipment acquired were valued utilizing the cost approach, which estimates fair value by determining the current cost of
 
(Continued)
 
11

 
NRG SOLAR KANSAS SOUTH LLC
Notes to Financial Statements
December 31, 2013
 
replacing an asset with another of equivalent economic utility adjusted for functional obsolescence and physical depreciation. The assets acquired were classified as plant equipment and commenced depreciation upon the commercial operation date of the Facility.
 
(4)                    Property, Plant, and Equipment
 
As of December 31, 2013, property, plant, and equipment consisted entirely of plant equipment of $49.2 million, net of $1.3 million of accumulated depreciation. The depreciable lives of the plant equipment range from 15 to 25 years.
 
In 2013, the Company applied for cash grants in lieu of investment tax credits from the United States (U.S.) Treasury Department in the amount of $22.7 million for the Kansas South facility, which is a qualified renewable energy project. The renewable energy grant receivables were recorded when the cash grant applications were filed, which resulted in a reduction to the book basis of the property, plant, and equipment.
 
In 2013, a reserve was established for a portion of the renewable energy grant receivable that was not expected to be realized as a result of the U.S. government’s budget sequestration. The $1.6 million reserve resulted in an increase in the book basis of the property, plant, and equipment.
 
In addition, the Company recorded the related deferred tax assets of $6.2 million recognizable by the Parent as a distribution to the Parent with a corresponding reduction in property, plant, and equipment.
 
In connection with the cash grants and related deferred tax assets, the book value of the Company’s property, plant, and equipment was reduced by a total of $27.3 million for 2013.
 
(5)                    Long-Term Debt
 
On April 26, 2012, Kansas South entered into a credit agreement (Credit Agreement) with Mizuho Corporate Bank, LTD for a $38 million construction loan that was convertible to a term loan upon completion of the project and a $21 million cash grant loan.
 
On June 28, 2013, the Company converted the outstanding construction loan to a term loan. The term loan has an interest rate of six-month LIBOR (0.2466% at December 31, 2013) plus an applicable margin of 2.625%. The applicable margin increases by 0.25% every four years. The cash grant loan has an interest rate of one-month LIBOR (0.1690% at December 31, 2013) plus an applicable margin of 2.00%. The term loan amortizes on a predetermined schedule and is secured by all of the assets of Kansas South. The Credit Agreement also includes a letter-of-credit facility on behalf of Kansas South of up to $4.6 million.
 
As of December 31, 2013, there was approximately $36.6 million outstanding under the term loan, $21.3 million under the cash grant loan, and $4.4 million of letters of credit were issued under the Credit Agreement.
 
The Kansas South Credit Agreement requires that the Company maintains a Historical Debt Service Coverage Ratio of at least 1.20 on each quarterly payment date. As of the December 31, 2013 quarterly payment date, the Company was in compliance with this requirement.
 
(Continued)
 
12

 
NRG SOLAR KANSAS SOUTH LLC
Notes to Financial Statements
December 31, 2013
 
The following table summarizes the principal maturities of the Company’s long-term debt for the years ending after December 31, 2013 (amounts in thousands):
 
 	 	Debt	 	
 	 	maturities	 	
Year ended December 31:	 	 	 	
2014	 	$	23,326	 	
2015	 	2,083	 	
2016	 	2,110	 	
2017	 	2,071	 	
2018	 	1,970	 	
Thereafter	 	26,372	 	
Total	 	$	57,932	 	
 
(6)                    Derivative Instruments and Hedging Activity
 
(a)                     Interest Rate Swaps
 
In accordance with the Credit Agreement described in note 5, Long-Term Debt, on May 3, 2013, the Company entered into a fixed for floating interest rate swap for 75% of the outstanding term loan amount, intended to hedge the risks associated with floating interest rates. The Company will pay its counterparty the equivalent of 2.3675% fixed interest payments on a predetermined notional value, and the Company will receive semi annually the equivalent of a floating interest payment based on a six-month LIBOR from December 31, 2013 through the term loan maturity date. The original notional amount of the swap, which became effective in June 2013, and matures on December 31, 2030, was $28 million and will increase and amortize in proportion to the loan. As of December 31, 2013, the notional amount of the swap was $28 million.
 
(b)                     Accumulated Other Comprehensive Income
 
The following table summarizes the effects of the swaps on the Company’s accumulated OCI balance, which reflects the change in fair value of the swaps described above (amounts in thousands):
 
Accumulated OCI balance as at May 13, 2013	 	$	—	 	
Mark-to-market of cash flow hedge accounting contracts	 	1,622	 	
Accumulated OCI balance as at December 31, 2013	 	$	1,622	 	
 
For the year ended December 31, 2013, there was no impact to the statement of operations and comprehensive income related to ineffectiveness or reclassifications from OCI. The Company expects losses of approximately $539 thousand to be realized from OCI during the next 12 months.
 
(Continued)
 
13

 
NRG SOLAR KANSAS SOUTH LLC
Notes to Financial Statements
December 31, 2013
 
(7)                    Related-Party Transactions
 
The Company entered into an asset management agreement (AMA) with NRG Solar Asset Management, LLC, an indirect wholly owned subsidiary of NRG. Beginning on May 13, 2013, the Company began paying management fees that increase in subsequent periods based on certain adjustment ratios and will reimburse its affiliate for reasonable expenses incurred in connection with its services.
 
The AMA will remain in effect until the earlier of the sale of Kansas South to a third party or a date that is 10 years after the final commercial operations date. Upon the expiration of the initial term, the AMA will automatically extend in one year increments unless either party delivers written notice of termination to the other party no later than 180 days prior to the expiration of the initial term. The Company incurred costs under the AMA of approximately $19 thousand for the period from acquisition to December 31, 2013.
 
(8)                    Commitments and Contingencies
 
In the normal course of business, the Company is subject to various claims and litigation. Management of the Company expects that these various litigation items will not have a material adverse effect on the results of operations, cash flows, or financial position of the Company.
 
(a)                     Power Purchase Agreement
 
In June 2011, the Company entered into a 20-year PPA to provide solar-generated electricity to Pacific Gas and Electric Company. Under the terms of the PPA, the Company is obligated to deliver up to 20 MW of electric energy output generated by the Facility. Revenues consist of fixed payments based on production. Under the terms of the PPA, the Company has guaranteed certain performance output that if not achieved could result in the payment of shortfall amounts.
 
(b)                     Operations and Maintenance Agreement
 
In December 2011, the Company entered into a 5-year operation and maintenance agreement (O&M Agreement) with Swinerton Builders, which is subject to an automatic extension for one year periods following the expiration of the initial term. Under this agreement, the Company pays a fixed monthly operating fee and provides reimbursement of all labor costs, including payroll taxes, and other costs. The Company incurred costs under the O&M Agreement of $188 thousand for the period from acquisition to December 31, 2013.
 
(c)                      Transmission Interconnection Agreement
 
On March 9, 2012, the Company entered into a 25-year small generator interconnection agreement (the Interconnection Agreement) with PG&E that connects the Facility to PG&E’s distribution system. Both the Company and PG&E are responsible for their share of reasonable costs associated with operating, maintaining, and replacing their distribution or interconnection facilities.
 
(Continued)
 
14

 
NRG SOLAR KANSAS SOUTH LLC
Notes to Financial Statements
December 31, 2013
 
(d)                     Lease Agreement
 
On August 3, 2011, the Company entered into a 20-year land lease agreement (Land Lease Agreement) with the RE Kansas South Landco LLC. Under the terms of the Land Lease Agreement, the Company is required to pay approximately $87,003 per year to RE Kansas South Landco LLC during the initial period, to be made in quarterly installments. The Company has the right to extend the lease for up to three additional five-year periods. The Company incurred costs under the lease agreement of $46 thousand for the period from acquisition to December 31, 2013.
 
Future minimum lease commitments under the land lease, which is accounted for as an operating lease, for the year ending after December 31, 2013, are as follows (in thousands):
 
2014	 	$	87	 	
2015	 	87	 	
2016	 	87	 	
2017	 	87	 	
2018	 	87	 	
Thereafter	 	1,175	 	
Total	 	$	1,610	 	
 
(9)                    Subsequent Events
 
In February 2014, the Company received a demand letter from Recurrent requesting payments for certain disputed items within the purchase and sale agreement. The Company has engaged independent engineers to investigate the validity of the related claims and has responded to the demand letter contesting the related payments. The Company’s maximum exposure with respect to the claim is $2.5 million, which would be reflected as an adjustment to the purchase price for the acquisition.
 
On April 21, 2014, the Company received $21 million from the U.S. Treasury Department, which represented the full amount of the renewable energy grant receivable. On April 24, 2014, the Company utilized the proceeds from the cash grant to repay the outstanding balance of the cash grant loan.
 
These financial statements and notes reflect the Company’s evaluation of events occurring subsequent to the balance sheet date through April 29, 2014, the date that the financial statements are available to be issued.
 
15

Exhibit 99.4
 
NRG SOLAR KANSAS SOUTH LLC
 
Financial Statements
(unaudited)
 
March 31, 2014

 
NRG SOLAR KANSAS SOUTH LLC
Balance Sheets
(Amounts in thousands)
 
 	 	March 31,
2014	 	December 31,
2013	 	
 	 	(unaudited)	 	 	 	
Assets	 	 	 	 	 	
Current assets:	 	 	 	 	 	
Cash	$	1,092	 	—	 	
Restricted cash	 	198	 	3,483	 	
Accounts receivable - trade	 	358	 	225	 	
Prepaid expenses	 	22	 	22	 	
Renewable energy grant receivable	 	21,115	 	21,115	 	
Total current assets	 	22,785	 	24,845	 	
Property, plant and equipment:	 	 	 	 	 	
Property, plant and equipment	 	50,450	 	51,534	 	
Less accumulated depreciation	 	(1,932	)	(1,277	)	
Net property, plant and equipment	 	48,518	 	50,257	 	
Other assets:	 	 	 	 	 	
Notes receivable	 	369	 	369	 	
Derivative assets	 	1,475	 	2,161	 	
Other noncurrent assets	 	272	 	272	 	
Total other assets	 	2,116	 	2,802	 	
Total assets	$	73,419	 	77,904	 	
Liabilities and Members’ Equity	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	
Current portion of long-term debt	$	23,076	 	23,326	 	
Accounts payable -trade	 	97	 	103	 	
Derivative liabilities	 	412	 	539	 	
Other current liabilities	 	821	 	3,770	 	
Total current liabilities	 	24,406	 	27,738	 	
Other liabilities:	 	 	 	 	 	
Long-term debt	 	34,606	 	34,606	 	
Total noncurrent liabilities	 	34,606	 	34,606	 	
Total liabilities	 	59,012	 	62,344	 	
Members’ equity	 	 	 	 	 	
Contributed capital	 	14,464	 	14,464	 	
Accumulated deficit	 	(1,120	)	(526	)	
Accumulated other comprehensive income	 	1,063	 	1,622	 	
Total members’ equity	 	14,407	 	15,560	 	
Total liabilities and members’ equity	$	73,419	 	77,904	 	
 
See accompanying Notes to Financial Statements

 
NRG SOLAR KANSAS SOUTH LLC
Statements of Operations and Comprehensive Income
(Amounts in thousands)
(unaudited)
 
 	 	Three months
ended March 31,
2014	 	
Operating revenue:	 	 	 	
Sales of electricity	 	$	806	 	
Total operating revenues	 	806	 	
Operating costs and expenses:	 	 	 	
Cost of operations	 	199	 	
Depreciation expense	 	655	 	
Total operating costs and expenses	 	854	 	
Operating loss	 	(48	)	
Other expense, net:	 	 	 	
Interest expense	 	546	 	
Total other expense, net	 	546	 	
Net loss	 	(594	)	
Other comprehensive income:	 	 	 	
Unrealized loss on derivatives	 	559	 	
Other comprehensive loss	 	559	 	
Comprehensive loss	 	$	(1,153	)	
 
See accompanying Notes to Financial Statements

 
NRG SOLAR KANSAS SOUTH LLC
Statements of Cash Flows
(Amounts in thousands)
(unaudited)
 
 	 	Three months
ended March 31,
2014	 	
Cash flows from operating activities:	 	 	 	
Net loss	 	$	(594	)	
Adjustments to reconcile net loss to net cash used in operating activities:	 	 	 	
Depreciation expense	 	655	 	
Changes in assets and liabilities:	 	 	 	
Accounts receivable - trade	 	(133	)	
Accounts payable - trade	 	(6	)	
Other current liabilities	 	263	 	
Net cash provided by operating activities	 	185	 	
Cash flows from investing activities:	 	 	 	
Capital expenditures	 	(2,128	)	
Decrease in restricted cash	 	3,285	 	
Net cash provided by investing activities	 	1,157	 	
Cash flows from financing activities:	 	 	 	
Repayment of long-term debt	 	(250	)	
Net cash used in financing activities	 	(250	)	
Net change in cash and cash equivalents	 	1,092	 	
Cash and cash equivalents, beginning of period	 	—	 	
Cash and cash equivalents, end of period	 	$	1,092	 	
 
See accompanying Notes to Financial Statements

 
Notes to Unaudited Financial Statements
 
(1)                    Nature of Business
 
NRG Solar Kansas South LLC (Kansas South or the Company), a Delaware limited liability company, is a wholly owned subsidiary of NRG Solar Kansas South Holdings LLC (Kansas South Holdings), a Delaware limited liability company, a wholly owned subsidiary of NRG Solar PV LLC (Solar PV), a Delaware limited liability company, a wholly owned subsidiary of NRG Solar LLC (NRG Solar), a Delaware limited liability company, a wholly owned subsidiary of NRG Repowering Holdings LLC (NRG RH), a Delaware limited liability company, a wholly owned subsidiary of NRG Energy, Inc. (NRG or the Parent).
 
The Company, along with Kansas South Holdings, was originally a wholly owned subsidiary of Recurrent Energy Development Holdings, LLC (Recurrent) and was organized to develop, design, construct, own, and operate the 20MW Kansas South photovoltaic solar generating facility located near Stratford, California. In February 2013, Solar PV entered into a Purchase and Sale Agreement with Recurrent to acquire 100% of the equity interest in the Company.
 
In June 2011, the Company entered into a 20-year solar project power purchase agreement (PPA) to provide solar-generated electricity to Pacific Gas and Electric (PG&E).
 
On May 13, 2013, the Company was acquired by NRG.  The construction of the Facility was completed and commercial operations commenced on June 7, 2013.  The accounting for the acquisition in accordance with ASC 805,  Business Combinations , was completed during the second quarter of 2014, with no material changes.
 
On April 21, 2014, the Company received $21 million from the U.S. Treasury Department, which represented the full amount of the renewable energy grant receivable. On April 24, 2014, the Company utilized the proceeds of the cash grant to repay the outstanding balance of the cash grant loan.
 
The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company’s annual financial statements. Interim results are not necessarily indicative of results for a full year.
 
(2)                    Derivative Instruments and Hedging Activity
 
The Company has a fixed for floating interest rate swap for 75% of its outstanding term loan amount.  The notional amount of the swap was $27 million as of March 31, 2014.  The following table summarizes the effects of the swap on the Company’s accumulated OCI balance, which reflects the change in the fair value of the swaps as they are accounted for as cash flow hedges (amounts in thousands):

Accumulated OCI balance as at December 31, 2013	 	$	1,622	 	
 	 	 	 	
Mark-to-market of cash flow hedge accounting contracts	 	(559	)	
 	 	 	 	
Accumulated OCI balance as at March 31, 2014	 	$	1,063	 	
 
(3)                    Commitments and Contingencies
 
In February 2014, the Company received a demand letter from Recurrent requesting payments for certain disputed items within the purchase and sale agreement. The Company engaged independent engineers to investigate the validity of the related claims and responded to the demand letter contesting the related payments. Thereafter, the parties engaged in settlement discussions and on July 17, 2014, they reached an agreement in principle to resolve the claims for approximately $1 million. 
 
(4)                    Subsequent Events
 
These financial statements and notes reflect the Company’s evaluation of events occurring subsequent to the balance sheet date through July 17, 2014, the date that the financial statements are available to be issued.

 

Exhibit 99.5
 
TA-HIGH DESERT, LLC
 
Financial Statements
 
December 31, 2013
 
(With Independent Auditors’ Report Thereon)

 
TA-HIGH DESERT, LLC
 
Table of Contents
 
 	Page(s)	
 	 	
Independent Auditors’ Report	1–2	
 	 	
Balance Sheet	3	
 	 	
Statement of Operations – Period from March 28, 2013 (acquisition) to December 31, 2013	4	
 	 	
Statement of Member’s Equity – Period from March 28, 2013 (acquisition) to December 31, 2013	5	
 	 	
Statement of Cash Flows – Period from March 28, 2013 (acquisition) to December 31, 2013	6	
 	 	
Notes to Financial Statements	7–15	

 
Independent Auditors’ Report
The Member
TA-High Desert, LLC:
 
We have audited the accompanying financial statements of TA-High Desert, LLC, which comprise the balance sheet as of December 31, 2013, and the related statements of operations, member’s equity, and cash flows for the period from March 28, 2013 (acquisition) to December 31, 2013, and the related notes to the financial statements.
 
Management’s Responsibility for the Financial Statements
 
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; 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.
 
Auditors’ Responsibility
 
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
 
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
 
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 
Opinion
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of TA-High Desert, LLC as of December 31, 2013, and the results of its operations and its cash flows for the period from March 28, 2013 (acquisition) to December 31, 2013, in accordance with U.S. generally accepted accounting principles.
 
/s/ KPMG LLP
 
Philadelphia, Pennsylvania
April 29, 2014
 
2

 
TA-HIGH DESERT, LLC
Balance Sheet
December 31, 2013
(Amounts in thousands)
 
Assets	 	 	 	
Current assets:	 	 	 	
Restricted cash	 	$	4,024	 	
Accounts receivable — trade	 	706	 	
Prepaid assets	 	133	 	
Renewable energy grant receivable	 	19,628	 	
Total current assets	 	24,491	 	
Property, plant, and equipment:	 	 	 	
Property, plant, and equipment	 	69,850	 	
Less accumulated depreciation	 	(1,734	)	
Net property, plant, and equipment	 	68,116	 	
Other assets:	 	 	 	
Other intangible asset, net of accumulated amortization of $375	 	9,486	 	
Other noncurrent assets	 	75	 	
Total other assets	 	9,561	 	
Total assets	 	$	102,168	 	
Liabilities and Member’s Equity	 	 	 	
Current liabilities:	 	 	 	
Current portion of long-term debt	 	$	24,976	 	
Accounts payable — trade	 	102	 	
Payable to affiliates	 	16	 	
Accrued expenses	 	49	 	
Other current liabilities	 	2,891	 	
Total current liabilities	 	28,034	 	
Other liabilities:	 	 	 	
Long-term debt	 	55,019	 	
Total noncurrent liabilities	 	55,019	 	
Total liabilities	 	83,053	 	
Commitment and contingencies (note 7)	 	 	 	
Member’s equity:	 	 	 	
Contributed capital	 	17,798	 	
Retained earnings	 	1,317	 	
Total member’s equity	 	19,115	 	
Total liabilities and member’s equity	 	$	102,168	 	
 
See accompanying notes to financial statements.
 
3

 
TA-HIGH DESERT, LLC
Statement of Operations
Period from March 28, 2013 (acquisition) to December 31, 2013
(Amounts in thousands)
 
Operating revenue:	 	 	 	
Sales of electricity	 	$	7,572	 	
Total operating revenue	 	7,572	 	
Operating costs and expenses:	 	 	 	
Cost of operations	 	1,190	 	
Depreciation expense	 	1,734	 	
Amortization of intangible asset	 	375	 	
Total operating costs and expenses	 	3,299	 	
Operating income	 	4,273	 	
Other expense, net:	 	 	 	
Interest expense	 	2,956	 	
Total other expense, net	 	2,956	 	
Net income	 	$	1,317	 	
 
See accompanying notes to financial statements.
 
4

 
TA-HIGH DESERT, LLC
Statement of Member’s Equity
Period from March 28, 2013 (acquisition) to December 31, 2013
(Amounts in thousands)
 
 	 	 	 	 	 	Total	 	
 	 	Contributed	 	Retained	 	member’s	 	
 	 	capital	 	earnings	 	equity	 	
Balance at March 28, 2013 (inception)	$	23,614	 	—	 	23,614	 	
Net income	 	—	 	1,317	 	1,317	 	
Non-cash dividend to Parent	 	(5,816	)	—	 	(5,816	)	
Balance as at December 31, 2013	$	17,798	 	1,317	 	19,115	 	
 
See accompanying notes to financial statements.
 
5

 
TA-HIGH DESERT, LLC
Statement of Cash Flows
Period from March 28, 2013 (acquisition) to December 31, 2013
(Amounts in thousands)
 
Cash flows from operating activities:	 	 	 	
Net income	 	$	1,317	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	
Depreciation expense	 	1,734	 	
Amortization of intangible asset	 	375	 	
Changes in assets and liabilities:	 	 	 	
Accounts receivable — trade	 	(706	)	
Prepaid assets	 	(133	)	
Accounts payable — trade and accrued expenses	 	51	 	
Payable to affiliates	 	16	 	
Net cash provided by operating activities	 	2,654	 	
Cash flows from investing activities:	 	 	 	
Capital expenditures	 	(66	)	
Change in restricted cash	 	(672	)	
Net cash used in investing activities	 	(738	)	
Cash flows from financing activity:	 	 	 	
Debt payments	 	(1,916	)	
Net cash used in financing activity	 	(1,916	)	
Net change in cash and cash equivalents	 	—	 	
Cash and cash equivalents, beginning of period	 	—	 	
Cash and cash equivalents, end of period	 	$	—	 	
Supplemental disclosure of cash flow information:	 	 	 	
Cash paid for interest	 	$	2,939	 	
Noncash investing activities:	 	 	 	
Reduction of fixed assets for deferred tax asset	 	$	5,816	 	
Reduction of fixed assets for renewable energy grant, net of reserve	 	19,628	 	
Noncash financing activities:	 	 	 	
Dividend paid to members	 	$	5,816	 	
 
See accompanying notes to financial statements.
 
6

 
TA-HIGH DESERT, LLC
Notes to Financial Statements
December 31, 2013
(1)                    Nature of Business
 
TA-High Desert, LLC (High Desert or the Company), a Delaware limited liability company, is a wholly owned subsidiary of RE Mayfair, LLC (Mayfair), a Delaware limited liability company, a wholly owned subsidiary of NRG Solar PV LLC (Solar PV), a Delaware limited liability company, a wholly owned subsidiary of NRG Solar LLC (NRG Solar), a Delaware limited liability company, a wholly owned subsidiary of NRG Repowering Holdings LLC (NRG RH), a Delaware limited liability company, a wholly owned subsidiary of NRG Energy, Inc. (NRG or the Parent).
 
The Company, along with Mayfair, was originally a wholly owned subsidiary of Recurrent Energy Development Holdings, LLC (Recurrent) and was organized to develop, design, construct, own, and operate the 20MW High Desert photovoltaic solar generating facility located near Lancaster, California. In February 2013, Solar PV entered into a Purchase and Sale Agreement with Recurrent to acquire 100% of the equity interest in the Company. The acquisition was completed on March 28, 2013.  See note 3,  Business Acquisition , for further information regarding the purchase of High Desert.
 
In December 2009, the Company entered into a 20-year solar project power purchase agreement (PPA) to provide solar-generated electricity to Southern California Edison (SCE). See note 7,  Commitments and Contingencies , for further information regarding the PPA.
 
The construction of the facility was completed and commercial operations commenced on March 25, 2013.
 
(2)                    Summary of Significant Accounting Policies
 
The financial statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
 
(a)                     Restricted Cash
 
Restricted cash consists primarily of funds held to satisfy the requirements of the Company’s debt agreement. These funds are restricted for current debt service payments and other operating costs, per the restrictions of the debt agreement.
 
(b)                     Accounts Receivable — Trade
 
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. There was no allowance for doubtful accounts at December 31, 2013.
 
(c)                      Property, Plant, and Equipment
 
Property, plant, and equipment are stated at cost. Significant additions or improvements extending asset lives are capitalized, while repairs and maintenance, including planned major maintenance, are charged to expenses as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets.
 
(d)                     Impairment of Long-Lived Assets
 
Long-lived assets that are held and used are reviewed for impairment whenever events or changes in circumstances indicate carrying values may not be recoverable. Such reviews are performed in
 
(Continued)
 
7

 
TA-HIGH DESERT, LLC
Notes to Financial Statements
December 31, 2013
 
accordance with Accounting Standards Codification (ASC) 360, Property, Plant, and Equipment. An impairment loss is recognized if the total future estimated undiscounted cash flows expected from an asset are less than its carrying value. An impairment charge is measured by the difference between an asset’s carrying amount and fair value with the difference recorded in operating costs and expenses in the statements of operations. Fair values are determined by a variety of valuation methods, including appraisals, sales prices of similar assets, and present value techniques. There have been no indicators of impairment as of December 31, 2013.
 
(e)                      Intangibles Assets
 
The intangible asset is the value, determined as of the date of acquisition, for the rights to the High Desert PPA. This definite-lived intangible asset is amortized over 20 years, which is the term of the PPA agreement.
 
(f)                        Income Taxes
 
This Company is a wholly owned limited liability company (a disregarded entity) for federal and state income tax purposes. Therefore, federal and state income taxes are assessed at the Parent level. Accordingly, no provision has been made for federal or state income taxes in the accompanying financial statements. If the Company was a separate taxpaying entity, pro forma tax expense for the period from acquisition to December 31, 2013 would have been approximately $537 thousand.
 
(g)                     Revenue Recognition
 
The Company recognizes revenue billable under the provisions of the PPA for energy and capacity with SCE, which has a term of 20 years. Revenue recognized under the PPA is calculated based on power output and established prices, as defined in the PPA. The PPA is accounted for as an operating lease in accordance with ASC 840,  Leases  (ASC 840). ASC 840 requires minimum lease payments to be amortized over the term of the lease and contingent rentals are recorded when the achievement of the contingency becomes probable. The Company’s lease has no minimum lease payments. All rent is recorded as contingent rent on an actual basis when the electricity is delivered.
 
(h)                     Commitments and Contingencies
 
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change.
 
(i)                        Concentrations of Credit Risk
 
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of restricted cash, accounts receivable — trade, renewable energy grant receivable, and accounts payable — trade. Restricted cash is held in a money market fund and invested in treasury and other government securities.
 
(Continued)
8

 
TA-HIGH DESERT, LLC
Notes to Financial Statements
December 31, 2013
 
The Company sells 100% of the power it generates to a single customer, SCE, through a PPA. At December 31, 2013, the accounts receivable with this customer totaled $706 thousand. The maximum amount of loss due to credit risk, should the customer fail to perform, is the amount of the outstanding receivable, and any losses associated with replacing this one customer.
 
(j)                        Fair Value Measurements
 
The Company accounts for the fair value of financial instruments in accordance with ASC 820, Fair Value Measurements and Disclosures.  The Company does not hold or issue financial instruments for trading purposes.
 
For restricted cash, accounts receivable — trade, accounts payable, payable to affiliate, and accrued expenses, the carrying amount approximates fair value because of the short-term maturity of those instruments and is classified as Level 1 within the fair value hierarchy.
 
The carrying value of long-term debt approximates fair value as the long-term debt carries a variable interest rate and is classified as Level 3 in the fair value hierarchy.
 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting principles generally accepted in the United States of America (U.S. GAAP) establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are as follows:
 
Level 1 — Quoted prices in active markets for identical assets or liabilities.
 
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
 
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.
 
(k)                     Other Comprehensive Income
 
The Company’s total comprehensive income is equal to net income for the year ended December 31, 2013.
 
(Continued)
 
9

 
TA-HIGH DESERT, LLC
Notes to Financial Statements
December 31, 2013
 
(l)                        Use of Estimates
 
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Estimates are used for such items as business acquisitions, derivative instruments, and impairment of long-lived assets, intangible assets, and contingencies, among others.
 
(m)                  Recent Accounting Developments
 
ASU 2013-02 — In February 2013, the FASB issued ASU No. 2013-02, Other Comprehensive Income (Topic 220) Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,  or ASU No. 2013-02. The amendments in ASU No. 2013-02 require the Company to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income, either on the face of the income statement or in the notes, if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income in the same reporting period. For other amounts not required by U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures, which provide additional information about the amounts. The guidance is effective prospectively for reporting period beginning after December 15, 2012. As this guidance provides only presentation requirements, the adoption of this standard did not impact the Company’s results of operations, cash flows, or financial position.
 
(3)                    Business Acquisition
 
On March 28, 2013, Solar PV acquired 100% of the equity interest in High Desert for $23.6 million. The acquisition was accounted for by Solar PV using acquisition accounting and through the application of “push-down” accounting, the purchase price paid by Solar PV was allocated to the Company’s assets, liabilities and equity as of the acquisition date.  Accordingly, the Company recorded the identifiable assets acquired and liabilities assumed at their estimated fair values on the acquisition date, while transaction costs associated with the acquisition were expensed as incurred. At December 31, 2013, the initial accounting for the business combination was not complete because additional information still needs to be received.
 
(Continued)
 
10

 
TA-HIGH DESERT, LLC
Notes to Financial Statements
December 31, 2013
 
The following table summarizes the provisional values assigned to the net assets acquired as of the acquisition date (in thousands):
 
Assets:	 	 	 	
Restricted cash	 	$	3,352	 	
Construction in progress	 	95,204	 	
Intangible asset	 	9,861	 	
Other noncurrent asset	 	75	 	
Total assets	 	108,492	 	
Liabilities:	 	 	 	
Accounts payable	 	100	 	
Accrued expenses and other current liabilities	 	2,867	 	
Current portion of long-term debt	 	24,088	 	
Long-term debt	 	57,823	 	
Total liabilities	 	84,878	 	
Net assets acquired	 	$	23,614	 	
 
The provisional fair values of the property, plant, and equipment and PPA acquired at the acquisition date were measured primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement as defined in ASC 820. Significant considerations in determining fair value measurements as defined in ASC 820 of the assets acquired and liabilities assumed are as follows:
 
·                              Property, plant, and equipment — The estimated fair values of property, plant, and equipment acquired were valued utilizing the cost approach, which estimates fair value by determining the current cost of replacing an asset with another of equivalent economic utility adjusted for functional obsolescence and physical depreciation. The assets acquired were classified as construction in progress and commenced depreciation upon the commercial operation date of the facility.
 
·                              Power purchase agreement — The estimated fair value of the PPA acquired was valued utilizing a variation of the income approach. Under this approach, the present value of expected future cash flows resulting from the acquired PPA, considering operating costs of the solar facility and charges for contributory assets utilized in the business, such as working capital and property, plant, and equipment, was estimated and then discounted to present value at the weighted average cost of capital of an integrated utility peer group adjusted for project-specific financing attributes. Charges for contributory assets are largely driven by costs incurred to construct the solar facility under the assumed Engineering, Procurement & Construction (EPC) Agreement.
 
(Continued)
 
11

 
TA-HIGH DESERT, LLC
Notes to Financial Statements
December 31, 2013
 
(4)                    Property, Plant, and Equipment
 
At December 31, 2013, property, plant, and equipment consisted entirely of plant equipment of $69.9 million, net of $1.7 million of accumulated depreciation. The depreciable lives of the plant equipment range from 20 to 30 years.
 
In 2013, the Company applied for a cash grant in lieu of investment tax credits from the U.S. Treasury Department in the amount of $25.4 million, for the High Desert project, which is a qualified renewable energy project. The renewable energy grant receivable was recorded when the cash grant application was filed, which resulted in a reduction to the book basis of the property, plant, and equipment.
 
On April 9, 2014 the Company received proceeds from its cash grant application of $19.6 million from the U.S. Treasury Department. As a result, the Company recorded an additional reserve to reduce the renewable energy grant receivable to $19.6 million as of December 31, 2013, with a corresponding entry to Property, Plant and Equipment.
 
In 2013, a reserve was established for a portion of the renewable energy grant receivable that was not expected to be realized as a result of the U.S. government’s budget sequestration. The $1.8 million reserve resulted in an increase in the book basis of the property, plant, and equipment.
 
The Company recorded the related deferred tax assets of $5.8 million recognizable by the Parent as a distribution to the Parent, with a corresponding reduction in the book value of the related property, plant, and equipment.
 
In connection with the cash grants and related tax assets, the book value of the Company’s property, plant, and equipment was reduced by a total of $25.4 million for 2013.
 
(5)                    Debt
 
On August 3, 2012, the Company entered into the Note Purchase and Private Shelf Agreement (the Credit Agreement) with Prudential Investment Management. The Credit Agreement includes $58.0 million of Senior Floating Rate Construction Notes, $22.2 million of Senior Secured Floating Rate Bridge Notes, and $11.8 million of Senior Secured Floating Rate Revolving Notes. The floating rate notes and revolving facility bear interest equal to the three-month LIBOR plus 2.5%. The revolving facility can be used in cash or issuance of up to $9 million in letters or credit. All of the assets of the Company have been pledged as collateral for this agreement.
 
On March 29, 2013, the Company converted the outstanding construction notes to fixed-rate debt with an interest rate of 5.15%. The term loan matures on the 18th anniversary of the term conversion date.
 
As of December 31, 2013, $51.4 million was outstanding under the fixed-rate term loan, $22.2 million was outstanding under the Senior secured floating rate bridge loans, and $6.4 million of floating rate notes were outstanding. Additionally, $8.8 letters of credit in support of the project were issued under the revolving debt portion of the facility. The Company was in compliance with all debt covenants as of December 31, 2013.
 
(Continued)
 
12

 
TA-HIGH DESERT, LLC
Notes to Financial Statements
December 31, 2013

The following table summarizes the principal maturities of the Company’s debt as of December 31, 2013 (in thousands):
 
 	 	Debt	 	
 	 	maturities	 	
Year ended December 31:	 	 	 	
2014	 	$	24,976	 	
2015	 	2,879	 	
2016	 	2,952	 	
2017	 	3,018	 	
2018	 	3,095	 	
Thereafter	 	43,075	 	
Total	 	$	79,995	 	
 
(6)                    Related-Party Transactions
 
On February 27, 2013, the Company entered into an asset management agreement (AMA) with NRG Solar Asset Management, LLC, an indirect wholly owned subsidiary of NRG. Under this agreement, asset management fees increase in subsequent periods based on certain adjustment ratios and allow for the reimbursement of reasonable expenses incurred in connection with its services.
 
The AMA will remain in effect until the earlier of the sale of the Company to a third party or a date that is 10 years after the commercial operations date. Upon the expiration of the initial term, the AMA will automatically extend in one-year increments unless either party delivers written notice of termination to the other party no later than 180 days prior to the expiration of the initial term. The Company incurred costs under the AMA agreement of $34 thousand for the period from acquisition to December 31, 2013.
 
(7)                    Commitments and Contingencies
 
The Company enters into contracts in the ordinary course of business that contain various representations, warranties, indemnifications, and guarantees. Some of the agreements contain indemnities that cover the other party’s negligence or limit the other party’s liability with respect to third-party claims, in which event the Company effectively indemnifies the other party. While there is the possibility of a loss related to such representations, warranties, indemnifications, and guarantees in the contracts and such loss could be significant, the Company considers the probability of loss to be remote.
 
Power Purchase Agreement — On December 30, 2009, the Company entered into a 20-year PPA to provide solar-generated electricity to Southern California Edison. Under the terms of the PPA, the Company is obligated to deliver up to 20 MW of electric energy output generated by the facility as well as renewable energy attributes for a period of 20 years. Revenues consist of fixed payments based on production. Under the terms of the PPA, the Company has guaranteed certain performance output that if not achieved will be obligated to pay shortfall amounts. No such payments were required in 2013.
 
Operation and Maintenance Agreement — On April 23, 2012, the Company entered into a five-year operation and maintenance agreement (O&M) with Swinerton Builders, which can be extended on an annual basis for up to five years following the expiration of the Term. Under this agreement, the Company
 
(Continued)
 
13

 
TA-HIGH DESERT, LLC
Notes to Financial Statements
December 31, 2013
 
pays a fixed monthly operating fee and provides reimbursement of all labor costs, including payroll taxes, and other costs. The Company incurred costs under the O&M agreement of $304 thousand for the period from acquisition to December 31, 2013.
 
Transmission Interconnection Agreement — On December 22, 2011, the Company entered into a 25-year small generator interconnection agreement (the Interconnection Agreement) with SCE that connects the facility to SCE’s distribution system. Both the Company and SCE are responsible for their share of reasonable costs associated with operating, maintaining, and replacing their distribution or interconnection facilities.
 
Lease Agreement — On August 3, 2011, the Company entered into a 20-year land lease agreement (Land Lease Agreement) with RE Mayfair Landco LLC. Under the terms of the Land Lease Agreement, the Company is required to pay approximately $311,016 per year to RE Mayfair Landco LLC, in quarterly installments. During the term of the Land Lease Agreement, the Company has the right to extend the terms for up to three additional five-year periods.
 
Future minimum lease commitments under the land lease, which is accounted for as an operating lease, are as follows (in thousands):
 
2014	 	$	311	 	
2015	 	311	 	
2016	 	311	 	
2017	 	311	 	
2018	 	311	 	
Thereafter	 	4,432	 	
Total	 	$	5,987	 	
 
(8)                    Subsequent Events
 
On February 24, 2014, the Company utilized cash generated from operating activities to make an optional prepayment of $900 thousand with respect to the Credit Agreement.
 
On April 9, 2014, the Company received proceeds from its cash grant application of $19.6 million from the U.S. Treasury. On April 21, 2014, the Company utilized the proceeds from the cash grant, along with $1.7 million contributed to the Company by NRG RH, to repay the outstanding balance of the Senior Secured Floating Rate Bridge Notes. The Company is evaluating the basis for the U.S. Treasury Department’s award and all of its options for recovering the amount by which the U.S. Treasury Department reduced the cash grant award.
 
(Continued)
 
14

 
TA-HIGH DESERT, LLC
Notes to Financial Statements
December 31, 2013
 
In February 2014, the Company received a demand letter from Recurrent requesting payments for certain disputed items within the purchase and sale agreement. The Company has engaged independent engineers to investigate the validity of the related claims and has responded to the demand letter contesting the related payments. The Company’s maximum exposure with respect to the claim is $3.6 million, which would be reflected as an adjustment to the purchase price for the acquisition.
 
These financial statements and notes reflect the Company’s evaluation of events occurring subsequent to the balance sheet date through April 29, 2014, the date that the financial statements are available to be issued.

15

Exhibit 99.6
 
TA-HIGH DESERT, LLC
 
Financial Statements
(unaudited)
 
March 31, 2014

 
TA-HIGH DESERT, LLC
Balance Sheets
(Amounts in thousands)
 
 	 	March 31,
2014	 	December 31,
2013	 	
 	 	(unaudited)	 	 	 	
Assets	 	 	 	 	 	
Current assets:	 	 	 	 	 	
Cash	$	705	 	—	 	
Restricted cash	 	525	 	4,024	 	
Accounts receivable - trade	 	548	 	706	 	
Prepaid expenses	 	103	 	133	 	
Renewable energy grant receivable	 	19,628	 	19,628	 	
Total current assets	 	21,509	 	24,491	 	
Property, plant and equipment:	 	 	 	 	 	
Property, plant and equipment	 	69,984	 	69,850	 	
Less accumulated depreciation	 	(2,312	)	(1,734	)	
Net property, plant and equipment	 	67,672	 	68,116	 	
Other assets:	 	 	 	 	 	
Other intangible asset, net of accumulated amortization of $500 and $375 in 2014 and 2013, respectively	 	9,361	 	9,486	 	
Other assets	 	75	 	75	 	
Total other assets	 	9,436	 	9,561	 	
Total assets	$	98,617	 	102,168	 	
Liabilities and Members’ Equity	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	
Current portion of long-term debt	$	24,076	 	24,976	 	
Accounts payable - trade	 	97	 	102	 	
Accounts payable - affiliates	 	4	 	16	 	
Accrued expenses	 	59	 	49	 	
Other current liabilities	 	942	 	2,891	 	
Total current liabilities	 	25,178	 	28,034	 	
Other liabilities:	 	 	 	 	 	
Long-term debt	 	55,019	 	55,019	 	
Total noncurrent liabilities	 	55,019	 	55,019	 	
Total liabilities	 	80,197	 	83,053	 	
Members’ equity:	 	 	 	 	 	
Contributed capital	 	17,798	 	17,798	 	
Retained earnings	 	622	 	1,317	 	
Total members’ equity	 	18,420	 	19,115	 	
Total liabilities and members’ equity	$	98,617	 	102,168	 	
 
See accompanying Notes to Financial Statements.

 
TA-HIGH DESERT, LLC
Statements of Operations and Comprehensive Loss
(Amounts in thousands)
(unaudited)
 
 	 	Three months
ended March 31,
2014	 	
Operating revenue:	 	 	 	
Sales of electricity	$	1,295	 	
Total operating revenues	 	1,295	 	
Operating costs and expenses:	 	 	 	
Cost of operations	 	347	 	
Depreciation expense	 	578	 	
Amortization of intangible asset	 	125	 	
Total operating costs and expenses	 	1,050	 	
Operating income	 	245	 	
Other expense, net:	 	 	 	
Interest expense	 	940	 	
Total other expense, net	 	940	 	
Net loss	$	(695	)	
 
See accompanying Notes to Financial Statements.

 
TA-HIGH DESERT, LLC
Statements of Cash Flows
(Amounts in thousands)
(unaudited)
 
 	 	Three months
ended March 31,
2014	 	
Cash flows from operating activities:	 	 	 	
Net loss	$	(695	)	
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities:	 	 	 	
Depreciation expense	 	578	 	
Amortization of intangible asset	 	125	 	
Changes in assets and liabilities:	 	 	 	
Accounts receivable - trade	 	158	 	
Prepaid expenses	 	30	 	
Accounts payable - trade	 	(5	)	
Accounts payable - affiliates	 	(12	)	
Accrued expenses	 	10	 	
Net cash provided by/(used in) operating activities	 	189	 	
Cash flows from investing activities:	 	 	 	
Capital expenditures	 	(2,083	)	
Decrease/(increase) in restricted cash	 	3,499	 	
Net cash provided by/(used in) investing activities	 	1,416	 	
Cash flows from financing activities:	 	 	 	
Capital contributions from Parent	 	—	 	
Proceeds from issuance of long-term debt	 	—	 	
Repayment of debt	 	(900	)	
Payment of note payable to affiliate	 	—	 	
Net cash (used in)/provided by financing activities	 	(900	)	
Net change in cash and cash equivalents	 	705	 	
Cash and cash equivalents, beginning of period	 	—	 	
Cash and cash equivalents, end of period	$	705	 	
 
See accompanying Notes to Financial Statements.

 
Notes to Unaudited Financial Statements
 
(1)                    Nature of Business
 
TA-High Desert, LLC (High Desert or the Company), a Delaware limited liability company, is a wholly owned subsidiary of RE Mayfair, LLC (Mayfair), a Delaware limited liability company, a wholly owned subsidiary of NRG Solar PV LLC (Solar PV), a Delaware limited liability company, a wholly owned subsidiary of NRG Solar LLC (NRG Solar), a Delaware limited liability company, a wholly owned subsidiary of NRG Repowering Holdings LLC (NRG RH), a Delaware limited liability company, a wholly owned subsidiary of NRG Energy, Inc. (NRG or the Parent).
 
The Company, along with Mayfair, was originally a wholly owned subsidiary of Recurrent Energy Development Holdings, LLC (Recurrent) and was organized to develop, design, construct, own, and operate the 20MW High Desert photovoltaic solar generating facility located near Lancaster, California. In February 2013, Solar PV entered into a Purchase and Sale Agreement with Recurrent to acquire 100% of the equity interest in the Company.
 
In December 2009, the Company entered into a 20-year solar project power purchase agreement (PPA) to provide solar-generated electricity to Southern California Edison (SCE).
 
The construction of the facility was completed and commercial operations commenced on March 25, 2013.  On March 28, 2013, the Company was acquired by NRG.  The accounting for the acquisition in accordance with ASC 805,  Business Combinations , was completed during the first quarter of 2014, with no material changes.
 
On April 9, 2014, the Company received $20 million from the U.S. Treasury Department with respect to its application for a renewable energy grant.  On April 21, 2014, the Company utilized the proceeds, along with $1.7 million contributed to the Company by NRG RH, to repay the outstanding balance of the Senior Secured Floating Rate Notes.  The Company is evaluating the basis for the U.S. Treasury Department’s award and all of its options for recovering the amount by which the U.S. Treasury Department reduced the award.
 
The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company’s annual financial statements. Interim results are not necessarily indicative of results for a full year.
 
(2)                    Commitments and Contingencies
 
In February 2014, the Company received a demand letter from Recurrent requesting payments for certain disputed items within the purchase and sale agreement. The Company engaged independent engineers to investigate the validity of the related claims and responded to the demand letter contesting the related payments.  Thereafter, the parties engaged in settlement discussions and on July 17, 2014, they reached an agreement in principle to resolve the claims for approximately $3.6 million.
 
(3)                    Subsequent Events
 
These financial statements and notes reflect the Company’s evaluation of events occurring subsequent to the balance sheet date through July 17, 2014, the date that the financial statements are available to be issued.

Exhibit 99.7
 
PRO FORMA FINANCIAL STATEMENTS
 
Unaudited Pro Forma Condensed Consolidated Combined Financial Statements
 
The Unaudited Pro Forma Condensed Consolidated Combined Financial Statements, or the pro forma financial statements, combine the historical consolidated financial statements of Yield Inc. and the financial statements of certain ROFO Assets acquired on June 30, 2014 to illustrate the potential effect of the acquisitions. The Acquired ROFO Assets were El Segundo Energy Center, TA-High Desert and RE Kansas South.  The pro forma financial statements are based on, and should be read in conjunction with, the:
 
· accompanying notes to the Unaudited Pro Forma Condensed Consolidated Combined Financial Statements;
 
· consolidated financial statements of Yield Inc. for the year ended December 31, 2013 and for the three months ended March 31, 2014 and the notes relating thereto, incorporated herein by reference; and
 
· financial statements of the operating subsidiaries of Natural Gas Repowering LLC, the indirect owner of El Segundo Energy Center, NRG Solar Kansas South Holdings LLC, the indirect owner of RE Kansas South, and NRG Solar Mayfair LLC, the indirect owner of TA-High Desert, for the year ended December 31, 2013 and for the three months ended March 31, 2014 and the notes relating thereto.  These financial statements are for NRG West Holdings LLC, NRG Solar Kansas South LLC and TA-High Desert LLC.
 
The historical consolidated financial statements have been adjusted in the pro forma financial statements to give effect to pro forma events that are (1) directly attributable to the acquisition of El Segundo Energy Center, RE Kansas South and TA-High Desert, (2) factually supportable and (3) with respect to the pro forma statements of operations, expected to have a continuing impact on the combined results. The Unaudited Pro Forma Condensed Consolidated Combined Statements of Operations or the pro forma statements of operations, for the year ended December 31, 2013 and for the three months ended March 31, 2014, give effect to the acquisitions as if they occurred on January 1, 2013. The Unaudited Pro Forma Condensed Consolidated Combined Balance Sheet, or the pro forma balance sheet, as of March 31, 2014, gives effect to the acquisitions as if they occurred on March 31, 2014.
 
As described in the accompanying notes, the acquisitions of El Segundo Energy Center, RE Kansas South and TA-High Desert will be accounted for as a transfer of entities under common control and the purchase price will be allocated to the carrying values of the assets acquired and liabilities assumed as of the date of the acquisitions.
 
The pro forma financial statements have been presented for informational purposes only and are not necessarily indicative of what the combined company’s results of operations and financial position would have been had the acquisitions of El Segundo Energy Center, RE Kansas South and TA-High Desert been completed on the dates indicated.  Yield Inc. could incur significant costs to integrate the businesses. The pro forma financial statements do not reflect the cost of any integration activities or benefits that may result from synergies that may be derived from any integration activities.  In addition, the pro forma financial statements do not purport to project the future results of operations or financial position of the combined company.

 
Unaudited Pro Forma Combined Consolidated Income Statement
Three Months Ended March 31, 2014
 
 	 	NRG Yield, Inc.
Historical	 	El Segundo
Energy Center	 	RE Kansas
South	 	TA-High
Desert	 	Combined
Acquired ROFO
Assets	 	Pro Forma
Adjustments	 	Pro Forma
Combined	 	
 	 	(in millions, except per share amounts)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating revenues	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating revenues	 	$	110	 	$	27	 	$	1	 	$	1	 	$	29	 	$	—	 	$	139	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Costs and Expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of operations	 	53	 	6	 	—	 	—	 	6	 	—	 	59	 	
Depreciation and amortization	 	17	 	5	 	1	 	1	 	7	 	—	 	24	 	
General and administrative	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	
General and administrative - affiliate	 	2	 	—	 	—	 	—	 	—	 	—	 	2	 	
Total operating costs and expenses	 	72	 	11	 	1	 	1	 	13	 	—	 	85	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income	 	38	 	16	 	—	 	—	 	16	 	—	 	54	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Income/(Expense)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	 	1	 	—	 	—	 	—	 	—	 	—	 	1	 	
Other income, net	 	1	 	—	 	—	 	—	 	—	 	—	 	1	 	
Interest expense	 	(19	)	(6	)	(1	)	(1	)	(8	)	—	 	(27	)	
Total other income / (expense)	 	(17	)	(6	)	(1	)	(1	)	(8	)	—	 	(25	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income/(Loss) Before Income Taxes	 	21	 	10	 	(1	)	(1	)	8	 	—	 	29	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income tax expense/(benefit)	 	3	 	—	 	—	 	—	 	—	 	1	(a)	4	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income/(Loss)	 	18	 	10	 	(1	)	(1	)	8	 	(1	)	25	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Less: Net income/(loss) attributable to noncontrolling interest	 	14	 	—	 	—	 	—	 	—	 	5	(b)	19	 	
Net income/(loss) attributable to NRG Yield, Inc.	 	4	 	10	 	(1	)	(1	)	8	 	(6	)	6	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share attributable to Class A common stockholders	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic weighted average number of Class A common shares outstanding	 	23	 	 	 	 	 	 	 	 	 	 	 	23	 	
Basic earnings per Class A common share	 	$	0.18	 	 	 	 	 	 	 	 	 	 	 	$	0.25	 	
Diluted weighted average number of Class A common shares outstanding	 	30	 	 	 	 	 	 	 	 	 	 	 	30	 	
Diluted earnings per Class A common share	 	$	0.17	 	 	 	 	 	 	 	 	 	 	 	$	0.20	 	

 
Unaudited Pro Forma Combined Consolidated Income Statement
Year Ended December 31, 2013
 
 	 	NRG Yield, Inc.
Historical	 	El Segundo Energy
Center	 	RE Kansas
South	 	TA-High
Desert	 	Combined NRG
ROFO Assets	 	Pro Forma
Adjustments	 	Pro Forma
Combined	 	
 	 	(in millions, except per share amounts)	 	
Total operating revenues	 	$	313	 	$	56	 	$	2	 	$	7	 	$	65	 	$	—	 	$	378	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	
Operating Costs and Expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	
Cost of operations	 	127	 	15	 	1	 	1	 	17	 	—	 	144	 	
Depreciation and amortization	 	51	 	7	 	1	 	2	 	10	 	—	 	61	 	
General and administrative	 	—	 	—	 	—	 	—	 	—	 	 	 	—	 	
General and administrative - affiliate	 	7	 	—	 	—	 	—	 	—	 	—	 	7	 	
Total operating costs and expenses	 	185	 	22	 	2	 	3	 	27	 	—	 	212	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Income	 	128	 	34	 	—	 	4	 	38	 	—	 	166	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Income/(Expense)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	 	22	 	—	 	—	 	—	 	—	 	—	 	22	 	
Other income, net	 	2	 	1	 	—	 	—	 	1	 	—	 	3	 	
Interest expense	 	(35	)	(12	)	(1	)	(3	)	(16	)	—	 	(51	)	
Total other income / (expense)	 	(11	)	(11	)	(1	)	(3	)	(15	)	—	 	(26	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (Loss) Before Income Taxes	 	117	 	23	 	(1	)	1	 	23	 	—	 	140	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income tax expense	 	8	 	—	 	—	 	—	 	—	 	3	(a)	11	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	
Net Income / (loss)	 	109	 	23	 	(1	)	1	 	23	 	(3	)	129	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Less: Predecessor income prior to initial public offering on July 22, 2013	 	54	 	—	 	—	 	—	 	—	 	—	 	54	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income/(loss) Subsequent to Initial Public Offering	 	55	 	23	 	(1	)	1	 	23	 	(3	)	75	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Less: Net income attributable to noncontrolling interest	 	42	 	—	 	—	 	—	 	—	 	15	(b)	57	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income / (loss) attributable to NRG Yield, Inc.	 	13	 	23	 	(1	)	1	 	23	 	(18	)	18	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share attributable to Class A common stockholders	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic weighted average number of Class A common shares outstanding	 	23	 	 	 	 	 	 	 	 	 	 	 	23	 	
Basic earnings per Class A common share	 	$	0.57	 	 	 	 	 	 	 	 	 	 	 	$	0.77	 	
Diluted weighted average number of Class A common shares outstanding	 	23	 	 	 	 	 	 	 	 	 	 	 	23	 	
Diluted earnings per Class A common share	 	$	0.57	 	 	 	 	 	 	 	 	 	 	 	$	0.77	 	

 
Unaudited Pro Forma Combined Consolidated Balance Sheet
As of March 31, 2014
 
 	 	NRG Yield, Inc.
Historical	 	El Segundo
Energy Center	 	RE Kansas
South	 	TA-High
Desert	 	Combined
Acquired ROFO
Assets	 	Pro Forma
Adjustments	 	Pro Forma
Combined	 	
ASSETS (in millions)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	420	 	12	 	1	 	1	 	14	 	(349	)(c)	85	 	
Restricted cash	 	21	 	11	 	—	 	—	 	11	 	—	 	32	 	
Accounts receivable - trade, net	 	38	 	5	 	1	 	1	 	7	 	—	 	45	 	
Accounts receivable - affiliate	 	1	 	—	 	—	 	—	 	—	 	—	 	1	 	
Inventory	 	15	 	—	 	—	 	—	 	—	 	—	 	15	 	
Derivative instruments	 	1	 	—	 	—	 	—	 	—	 	—	 	1	 	
Notes receivable	 	2	 	4	 	—	 	—	 	4	 	—	 	6	 	
Prepayments and other current assets	 	4	 	24	 	21	 	20	 	65	 	—	 	69	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total current assets	 	502	 	56	 	23	 	22	 	101	 	(349	)	254	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property, Plant and Equipment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total property, plant & equipment	 	1,711	 	643	 	50	 	69	 	762	 	—	 	2,473	 	
Less accumulated depreciation	 	(181	)	(13	)	(2	)	(2	)	(17	)	—	 	(198	)	
Property, plant and equipment, net of accumulated depreciation	 	1,530	 	630	 	48	 	67	 	745	 	—	 	2,275	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Assets	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity investments in affiliates	 	229	 	—	 	—	 	—	 	—	 	—	 	229	 	
Notes receivable	 	5	 	13	 	1	 	—	 	14	 	—	 	19	 	
Intangible assets, net of accumulated amortization	 	85	 	8	 	—	 	9	 	17	 	—	 	102	 	
Derivative instruments	 	7	 	4	 	1	 	—	 	5	 	—	 	12	 	
Deferred income taxes	 	144	 	—	 	—	 	—	 	—	 	—	 	144	 	
Other non-current assets	 	32	 	24	 	—	 	—	 	24	 	—	 	56	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total other assets	 	502	 	49	 	2	 	9	 	60	 	—	 	562	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Assets	 	2,534	 	735	 	73	 	98	 	906	 	(349	)	3,091	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current portion of long-term debt and capital leases	 	71	 	36	 	23	 	24	 	83	 	—	 	154	 	
Accounts payable	 	14	 	1	 	—	 	—	 	1	 	—	 	15	 	
Payable to affiliates	 	26	 	10	 	—	 	—	 	15	 	—	 	36	 	
Derivative instruments valuation	 	22	 	8	 	—	 	—	 	8	 	—	 	30	 	
Accrued expenses and other current liabilities	 	17	 	2	 	1	 	1	 	4	 	—	 	21	 	
Total current liabilities	 	150	 	57	 	24	 	25	 	111	 	—	 	256	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Liabilities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Long-term debt and capital leases	 	1,310	 	484	 	35	 	55	 	574	 	—	 	1,884	 	
Derivative instruments	 	20	 	—	 	—	 	—	 	—	 	—	 	20	 	
Other non current liabilities	 	23	 	3	 	—	 	—	 	3	 	—	 	26	 	
Total non-current liabilities	 	1,353	 	487	 	35	 	55	 	577	 	—	 	1,930	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Liabilities	 	1,503	 	544	 	59	 	80	 	683	 	—	 	2,186	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stockholders’ Equity	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	
Class A common stock, $0.01 par value; 500,000,000 shares authorized; 22,511,250 shares issued	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	
Class B common stock, $0.01 par value; 500,000,000 shares authorized; 42,738,750 shares issued	 	—	 	—	 	—	 	—	 	—	 	—	 	—	 	
Additional paid-in capital	 	644	 	165	 	14	 	18	 	197	 	(197	)(d)	644	 	
Retained earnings/(Accumulated (loss) deficit)	 	4	 	30	 	(1	)	—	 	29	 	(29	)(d)	4	 	
Accumulated other comprehensive income	 	(2	)	(4	)	1	 	—	 	(3	)	—	 	(5	)	
Noncontrolling Interest	 	385	 	—	 	—	 	—	 	—	 	(123	)(d)	262	 	
Total Stockholders’ Equity	 	1,031	 	191	 	14	 	18	 	223	 	(349	)	905	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Liabilities and Stockholders’ Equity	 	2,534	 	735	 	73	 	98	 	906	 	(349	)	3,095	 	

 
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

(a)                             Represents the adjustment to record the tax effect of including the results of the Acquired ROFO Assets in Yield Inc.’s results.
 
(b)                             Represents the adjustment to record noncontrolling interest associated with the results of the Acquired ROFO Assets in Yield Inc.’s results.
 
(c)                              Represents cash utilized, excluding the $8 million working capital adjustment, to fund the purchase price of the Acquired ROFO Assets.
 
(d)                                Represents the adjustment to reclassify the equity of the Acquired ROFO Assets to non-controlling interest. The acquisition represents a transfer of interests under common control and the equity was transferred at carrying value with no gain or loss recorded.