UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): September 1, 2016
 
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.)	
 
804 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))

Item 2.01.  Completion of Acquisition or Disposition of Assets.
 
On September 1, 2016, NRG Yield Operating LLC (the “Purchaser”), a subsidiary of NRG Yield, Inc. (“ NRG Yield ” or the “ Company ”) and owner of a 48.95% interest in CVSR Holdco LLC (“ CVSR ”), completed its previously announced acquisition of the remaining 51.05% interest in CVSR, which indirectly owns the CVSR solar facility through its ownership of High Plains Ranch II, LLC, from NRG Solar CVSR Holdings 2 LLC (the “ Seller ”), a wholly-owned subsidiary of NRG Energy, Inc. (the “ Transaction ”), pursuant to the purchase and sale agreement (the “ Purchase and Sale Agreement ”) with the Seller.
 
As part of the Transaction, the Purchaser paid a total purchase price of $78.5 million in cash consideration, excluding adjustments for working capital. The Purchaser also assumed $496 million of non-recourse project debt as of the closing date.  The cash purchase price was funded with cash on hand.
 
The foregoing description of the Purchase and Sale Agreement is not complete and is qualified in its entirety by reference to the full text of the Purchase and Sale Agreement, a copy of which is filed as Exhibit 2.1 to NRG Yield’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 9, 2016, and is incorporated herein by reference.
 
The terms of the Transaction were unanimously approved by the independent members of the board of directors of NRG Yield, which retained independent legal and financial advisors to assist in evaluating and negotiating the Transaction. In approving the Transaction, the independent members of the board of directors of NRG Yield based their decisions in part on an opinion from their independent financial advisor.
 
NRG Energy, Inc. owns 55.1% of the combined voting power of NRG Yield’s Class A, Class B, Class C and Class D common stock. In addition, NRG Yield depends on management and administration services provided by or under the direction of NRG Energy, Inc. under NRG Yield’s Management Services Agreement.

Item 8.01.  Other Events.

As described above, on September 1, 2016, the Purchaser completed the Transaction. This Current Report on Form 8-K includes the financial statements relating to the Transaction and the pro forma financial information required by Items 9.01(a) and 9.01(b), respectively, and includes the exhibits listed under Item 9.01(d) of this Current Report on Form 8-K. Also as part of this Current Report on Form 8-K, the Company is revising (i) its unaudited historical consolidated financial statements as of June 30, 2016, and for the three months and six months ended June 30, 2016 and 2015, (ii) its unaudited historical consolidated financial statements as of March 31, 2016, and for the three months ended March 31, 2016 and 2015 and (iii) its audited historical consolidated financial statements as of December 31, 2015 and 2014 and for each of the years ended December 31, 2015, 2014 and 2013 to reflect the retrospective effect of the Transaction, which is an acquisition accounted for as a transfer of entities under common control, completed by the Company subsequent to the Company's most recent fiscal year, which was significant pursuant to Rule 11-01(b) of Regulation S-X. Exhibits 99.4, 99.5, 99.6, 99.7, 99.8, 99.9 and 99.10 included in this Current Report on Form 8-K give retrospective effect to the Transaction.

2

Item 9.01. Financial Statements and Exhibits.

(a)                                Financial Statements of Businesses Acquired.

The audited financial statements of High Plains Ranch II, LLC as of December 31, 2015 and 2014 and for the years ended December 31, 2015 and 2014, and the unaudited financial statements of High Plains Ranch II, LLC as of June 30, 2016 and for the six months ended June 30, 2016 and 2015 are attached to this Current Report on Form 8-K as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference.

(b)    Pro Forma Financial Information.

The unaudited pro forma consolidated combined financial statements and explanatory notes relating to the Transaction are attached as Exhibit 99.3 to this Current Report on Form 8-K and are incorporated herein by reference.

(d) Exhibits.

 	 	 	
Exhibit No.	 	Document	
 	 	 	
2.1	 	Purchase and Sale Agreement, dated as of August 8, 2016, between NRG Solar CVSR Holdings 2 LLC and NRG Yield Operating LLC (incorporated by reference to Exhibit 2.1 to NRG Yield, Inc.'s Current Report on Form 8-K filed on August 9, 2016).	
23.1	 	Consent of KPMG LLP.	
23.2	 	Consent of KPMG LLP.	
99.1	 	Audited financial statements of High Plains Ranch II, LLC as of December 31, 2015 and 2014 and for the years ended December 31, 2015 and 2014.
	
99.2	 	Unaudited financial statements of High Plains Ranch II, LLC as of June 30, 2016 and for the six months ended June 30, 2016.	
99.3	 	Unaudited pro forma consolidated combined financial statements.
	
99.4	 	Recast 2015 Form 10-K – Part II, Item 6. Selected Financial Data.	
99.5	 	Recast 2015 Form 10-K – Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	
99.6	 	Recast 2015 Form 10-K – Part IV, Item 15. Exhibits, Financial Statement Schedules.	
99.7	 	Recast 2016 1Q Form 10-Q – Part I, Item 1. Financial Statements.	
99.8	 	Recast 2016 1Q Form 10-Q – Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	
99.9	 	Recast 2016 2Q Form 10-Q – Part I, Item 1. Financial Statements.	
99.10	 	Recast 2016 2Q Form 10-Q – Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	
101 INS	 	XBRL Instance Document.	
101 SCH	 	XBRL Taxonomy Extension Schema.	
101 CAL	 	XBRL Taxonomy Extension Calculation Linkbase.	
101 DEF	 	XRBL Taxonomy Extension Definition Linkbase.	
101 LAB	 	XBRL Taxonomy Extension Label Linkbase.	
101 PRE	 	XBRL Taxonomy Extension Presentation Linkbase.	

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:  September 6, 2016

4

 EXHIBIT INDEX

 	 	 	
Exhibit No.	 	Document	
 	 	 	
2.1	 	Purchase and Sale Agreement, dated as of August 8, 2016, between NRG Solar CVSR Holdings 2 LLC and NRG Yield Operating LLC (incorporated by reference to Exhibit 2.1 to NRG Yield, Inc.'s Current Report on Form 8-K filed on August 9, 2016).	
23.1	 	Consent of KPMG LLP.	
23.2	 	Consent of KPMG LLP.	
99.1	 	Audited financial statements of High Plains Ranch II, LLC as of December 31, 2015 and 2014 and for the years ended December 31, 2015 and 2014.	
99.2	 	Unaudited financial statements of High Plains Ranch II, LLC as of June 30, 2016 and for the six months ended June 30, 2016.	
99.3	 	Unaudited pro forma consolidated combined financial statements.	
99.4	 	Recast 2015 Form 10-K – Part II, Item 6. Selected Financial Data.	
99.5	 	Recast 2015 Form 10-K – Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	
99.6	 	Recast 2015 Form 10-K – Part IV, Item 15. Exhibits, Financial Statement Schedules.	
99.7	 	Recast 2016 1Q Form 10-Q – Part I, Item 1. Financial Statements.	
99.8	 	Recast 2016 1Q Form 10-Q – Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	
99.9	 	Recast 2016 2Q Form 10-Q – Part I, Item 1. Financial Statements.	
99.10	 	Recast 2016 2Q Form 10-Q – Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	
101 INS	 	XBRL Instance Document.	
101 SCH	 	XBRL Taxonomy Extension Schema.	
101 CAL	 	XBRL Taxonomy Extension Calculation Linkbase.	
101 DEF	 	XRBL Taxonomy Extension Definition Linkbase.	
101 LAB	 	XBRL Taxonomy Extension Label Linkbase.	
101 PRE	 	XBRL Taxonomy Extension Presentation Linkbase.	

5

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
NRG Yield, Inc.:

We consent to the incorporation by reference in the registration statements No. 333‑206061 on Form S-8, No. 333-190071 on Form S-8, No. 333-212096 on Form S-3, No. 333-205140 on Form S-3 and No. 333-204589 on Form S-3 of NRG Yield, Inc. of our report dated September 6, 2016, with respect to the consolidated balance sheets of NRG Yield, Inc. as of December 31, 2015 and 2014, and the related consolidated statements of operations, stockholders’ equity, cash flows, and comprehensive income for each of the years in the three-year period ended December 31, 2015, which report appears in the Current Report on Form 8-K of NRG Yield, Inc. dated September 6, 2016.

/s/ KPMG LLP
Philadelphia, Pennsylvania
September 6, 2016

Exhibit 23.2

Consent of Independent Auditors

The Members
High Plains Ranch II, LLC:

We consent to the incorporation by reference in the registration statements No. 333‑206061 on Form S-8, No. 333-190071 on Form S-8, No. 333-212096 on Form S-3, No. 333-205140 on Form S-3 and No. 333-204589 on Form S-3 of NRG Yield, Inc. of our report dated March 30, 2016, except for Note 9, as to which the date is September 6, 2016, with respect to the balance sheets of High Plains Ranch II, LLC as of December 31, 2015 and 2014, and the related statements of income and comprehensive income, members' equity and cash flows for the years ended December 31, 2015 and 2014, which report appears in the Form 8-K of NRG Yield, Inc. dated September 6, 2016.

(signed) KPMG LLP
Philadelphia, Pennsylvania
September 6, 2016

Exhibit 99.1
HIGH PLAINS RANCH II, LLC
Financial Statements
December 31, 2015 and 2014
(With Independent Auditors’ Report Thereon)

HIGH PLAINS RANCH II, LLC
Table of Contents

 	 	
 	Page(s)	
Independent Auditors' Report	1	
 	 	
Balance Sheets - December 31, 2015 and 2014	2	
 	 	
Statements of Operations and Comprehensive Income - Years ended December 31, 2015 and 2014	3	
 	 	
Statements of Members' Equity - Years ended December 31, 2015 and 2014	4	
 	 	
Statement of Cash Flows - Years ended December 31, 2015 and 2014	5	
 	 	
Notes to Financial Statements	6-14	

Independent Auditors’ Report
The Members
High Plains Ranch II, LLC:

We have audited the accompanying financial statements of High Plains Ranch II, LLC, which comprise the balance sheets as of December 31, 2015 and 2014, and the related statements of operations and comprehensive income, members’ equity, and cash flows for the years then ended, 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 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 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 High Plains Ranch II, LLC as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended, in accordance with U.S. generally accepted accounting principles.
/s/ KPMG LLP
Philadelphia, Pennsylvania
March 30, 2016, except for Note 9,
as to which the date is September 6, 2016

1

 	
 	 	 	 	 	 	 	 	 	 	 	
HIGH PLAINS RANCH II, LLC	
Balance Sheets	
December 31, 2015 and 2014	
(In thousands)	
Assets	 	2015	 	2014	
Current assets:	 	 	 	 	 	
 	Cash	 	 	 	$	45   	 	228   	
 	Restricted cash	 	82,725   	 	83,048   	
 	Accounts receivable – trade	 	3,648   	 	3,300   	
 	Notes receivable	 	9,623   	 	9,624   	
 	Spare parts inventory	 	1,079   	 	428   	
 	Renewable energy grant receivable	 	—    	 	75,000   	
 	Prepayments and other current assets	 	1,308   	 	1,271   	
 	 	Total current assets	 	98,428   	 	172,899   	
Property, plant, and equipment, net of accumulated depreciation of	 	 	 	 	
 	$80,638 and $49,270, respectively	 	821,554   	 	833,521   	
Other assets:	 	 	 	 	 	
 	Notes receivable	 	20,049   	 	29,672   	
 	Other receivable – SunPower indemnity	 	75,000   	 	—    	
 	 	Total other assets	 	95,049   	 	29,672   	
 	 	Total assets	$	1,015,031   	 	1,036,092   	
Liabilities and Members’ Equity	 	 	 	 	
Current liabilities:	 	 	 	 	
 	Current portion of long-term debt	$	22,652   	 	21,081   	
 	Accounts payable – trade	 	384   	 	241   	
 	Accounts payable – affiliate	 	1,099   	 	1,654   	
 	Accrued interest expense	 	9,105   	 	9,347   	
 	Other current liabilities	 	82   	 	555   	
 	 	Total current liabilities	 	33,322   	 	32,878   	
Other liabilities:	 	 	 	 	
 	Long-term debt	 	766,673   	 	789,128   	
 	Asset retirement obligation	 	3,825   	 	2,806   	
 	Other noncurrent liabilities	 	3,918   	 	2,344   	
 	Total noncurrent liabilities	 	774,416   	 	794,278   	
 	 	Total liabilities	 	807,738   	 	827,156   	
Commitments and contingencies	 	 	 	 	
Members’ equity	 	207,293   	 	208,936   	
 	 	Total liabilities and members’ equity	$	1,015,031   	 	1,036,092   	
See accompanying notes to financial statements.	

2

 	
 	 	 	 	 	 	 	 	 	 	 	
HIGH PLAINS RANCH II, LLC	
Statements of Operations and Comprehensive Income	
Years ended December 31, 2015 and 2014	
(In thousands)	
 	 	 	 	 	 	 	 	2015	 	2014	
Operating revenues	$	83,493   	 	82,469   	
 	 	Total operating revenues	 	83,493   	 	82,469   	
Operating costs and expenses:	 	 	 	 	
 	Cost of operations	 	9,103   	 	11,211   	
 	Depreciation and accretion expense	 	31,748   	 	30,858   	
 	 	Total operating costs and expenses	 	40,851   	 	42,069   	
 	 	Operating income	 	42,642   	 	40,400   	
Other income (expense):	 	 	 	 	
 	Interest income	 	1,110   	 	2,784   	
 	Interest expense	 	(24,806)  	 	(25,910)  	
 	 	 	 	 	Total other expense	 	(23,696)  	 	(23,126)  	
 	 	 	 	 	Net income	 	18,946   	 	17,274   	
Other comprehensive income:	 	 	 	 	
 	Unrealized income on derivatives	 	2,124   	 	2,257   	
 	Other comprehensive income	 	2,124   	 	2,257   	
 	Comprehensive income	$	21,070   	 	19,531   	
See accompanying notes to financial statements.	

3

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
HIGH PLAINS RANCH II, LLC	
Statements of Members’ Equity	
Years ended December 31, 2015 and 2014	
(In thousands)	
 	 	 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	other	 	Total	
 	 	 	 	 	 	 	 	Contributed	 	Retained	 	comprehensive	 	members’	
 	 	 	 	 	 	 	 	capital	 	earnings	 	loss	 	equity	
Balance at December 31, 2013	$	236,686   	 	—    	 	(31,218)  	 	205,468   	
 	Net income	 	 	—    	 	17,274   	 	—    	 	17,274   	
 	Amortization of other comprehensive income	 	—    	 	—    	 	2,257   	 	2,257   	
 	Noncash contribution from NRG	 	6,835   	 	—    	 	—    	 	6,835   	
 	Cash dividend/return of capital to members	 	(47,483)  	 	(17,274)  	 	—    	 	(64,757)  	
 	Noncash settlement of affiliate borrowing	 	34,119   	 	—    	 	—    	 	34,119   	
 	Cash contribution from NRG	 	7,740   	 	—    	 	—    	 	7,740   	
Balance at December 31, 2014	 	237,897   	 	—    	 	(28,961)  	 	208,936   	
 	Net income	 	 	—    	 	18,946   	 	—    	 	18,946   	
 	Amortization of other comprehensive income	 	—    	 	—    	 	2,124   	 	2,124   	
 	Cash dividend/return of capital to members	 	(23,238)  	 	(18,946)  	 	—    	 	(42,184)  	
 	Noncash contribution from NRG	 	19,471   	 	—    	 	—    	 	19,471   	
Balance at December 31, 2015	$	234,130   	 	—    	 	(26,837)  	 	207,293   	
See accompanying notes to financial statements.	

4

 	
 	 	 	 	 	 	 	 	 	 	 	
HIGH PLAINS RANCH II, LLC	
Statements of Cash Flows	
Years ended December 31, 2015 and 2014	
(In thousands)	
 	 	 	 	 	 	 	 	2015	 	2014	
Cash flows from operating activities:	 	 	 	 	
 	Net income	 	$	18,946   	 	17,274   	
 	Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	
 	 	Depreciation expense	 	31,368   	 	30,649   	
 	 	Accretion of asset retirement obligation	 	380   	 	209   	
 	 	Amortization of debt issuance costs	 	197   	 	469   	
 	 	Amortization of swaption premiums	 	2,124   	 	2,257   	
 	Cash (used) provided by changes in other working capital:	 	 	 	 	
 	 	Accounts receivable – trade	 	(348)  	 	576   	
 	 	Spare parts inventory	 	68   	 	(428)  	
 	 	Prepayments and other current assets	 	(37)  	 	(96)  	
 	 	Accounts payable – trade	 	133   	 	(1,103)  	
 	 	Accounts payable – affiliate	 	(555)  	 	(39)  	
 	 	Other current liabilities	 	(473)  	 	261   	
 	 	Accrued interest expense	 	(242)  	 	10,455   	
 	 	Noncurrent liabilities	 	1,575   	 	150   	
 	 	 	 	 	Net cash provided by operating activities	 	53,136   	 	60,634   	
Cash flows from investing activities:	 	 	 	 	
 	Capital expenditures	 	—    	 	(26,920)  	
 	Receipt of indemnity from supplier	 	—    	 	57,509   	
 	Decrease in notes receivable	 	9,624   	 	5,795   	
 	Decrease (increase) in restricted cash	 	323   	 	(24,410)  	
 	Proceeds from renewable energy grants	 	—    	 	285,012   	
 	 	 	 	 	Net cash provided by investing activities	 	9,947   	 	296,986   	
Cash flows from financing activities:	 	 	 	 	
 	Proceeds from issuance of long-term debt	 	—    	 	48,427   	
 	Payments for long-term debt	 	(21,081)  	 	(348,802)  	
 	Dividend paid/return of capital to members	 	(42,185)  	 	(64,757)  	
 	Capital contributions from NRG	 	—    	 	7,740   	
 	 	 	 	 	Net cash used in financing activities	 	(63,266)  	 	(357,392)  	
 	 	 	 	 	Net change in cash	 	(183)  	 	228   	
Cash, beginning of period	 	228   	 	—    	
Cash, end of period	$	45   	 	228   	
Supplemental disclosure:	 	 	 	 	
 	Interest paid	 	$	22,727   	 	12,261   	
Noncash investing activities:	 	 	 	 	
 	Increase of fixed assets for deferred tax asset	$	19,471   	 	7,172   	
 	Increase of fixed assets for renewable energy grant shortfall	 	—    	 	33,663   	
 	Increase in asset retirement asset	 	1,228   	 	—    	
 	Increase in debt due to accrued interest converted to debt	 	—    	 	10,629   	
Noncash financing activities:	 	 	 	 	
 	Dividend to members	$	—    	 	6,835   	
 	Contributions from NRG related to forgiveness of affiliate borrowing	 	—    	 	(34,119)  	
See accompanying notes to financial statements.	 	 	 	 	

5

HIGH PLAINS RANCH II, LLC
Notes to Financial Statements
December 31, 2015 and 2014

(1) Nature of Business
High Plains Ranch II, LLC, or the Company, a Delaware limited liability company, was a wholly owned subsidiary of NRG Solar CVSR Holdings, LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Solar Sunrise, LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Renew LLC, or NRG Renew, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Repowering Holdings LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Energy, Inc., or NRG or the Parent.
The Company was organized to develop, construct, and own a 250‑megawatt, or MW, photovoltaic solar facility located in San Luis Obispo County, California known as California Valley Solar Ranch, or CVSR or the Facility. CVSR sells electricity to Pacific Gas & Electric Co., or PG&E, an electric utility based in San Francisco, California, under two 25-year power purchase agreements, or PPA, one for 210 MW and the other for 40 MW for resale to its customers.
On February 13, 2013, NRG Solar Sunrise, LLC assigned 51.05% of its membership shares in the Company to NRG Solar CVSR Holdings 2, LLC, a wholly owned subsidiary of NRG Solar Sunrise, LLC. On July 22, 2013, NRG Solar CVSR Holdings, LLC assigned 48.95% of its interest in the Company to NRG Yield Operating LLC, a consolidated subsidiary of NRG Yield LLC. NRG Yield, Inc. owns 44.7% of NRG Yield LLC and NRG owns the remaining portion.
Operations commenced on the first 22 MW phase in September 2012 and 105 MWs for phases two and four in December 2012. For the completion of the final phase, 21 MWs commenced operation in the third quarter of 2013 and 102 MWs commenced operation on October 31, 2013.
A summary of the major agreements entered into by the Company is set forth below:
 	 	
(a)	Power Purchase Agreement	
Effective September 23, 2011, the Company entered into two amended and restated PPAs with PG&E, whereby the Company is obligated to deliver up to 250 MW of electric energy output, including renewable attributes, generated by the Facility for a period of 25 years.
 	 	
(b)	Operation and Maintenance Agreement	
Effective September 30, 2011, the Company entered into an Operations and Maintenance agreement with NRG Energy Services LLC for an initial term of five years, with an automatic five‑year incremental renewal term 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 or the applicable renewal term. On July 15, 2015, NRG Energy Services assigned the O&M Agreement to NRG Renew Operations & Maintenance LLC, or RENOM. For the years ended December 31, 2015 and 2014, the Company paid $5.4 million and $6.3 million, respectively, for services provided under these agreements. These costs were included in cost of operations on the statements of operations and comprehensive income.
(2) Summary of Significant Accounting Policies
 	 	
(a)	Basis of Presentation	
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The Accounting Standards Codification, or ASC, established by the Financial Accounting Standards Board, or FASB, is the source of authoritative U.S. GAAP to be applied by nongovernmental entities.

6

 	 	
(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.
 	 	
(c)	Restricted Cash	
Restricted cash consists primarily of funds from operating activities that are restricted under the California Valley Solar Ranch Financing Agreement with the Federal Financing Bank to fund future debt repayment and operating costs.
 	 	
(d)	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, 2015 or 2014.
 	 	
(e)	Spare Parts Inventory	
Spare parts inventory is valued at a weighted average cost, since the Company expects to recover these costs in the ordinary course of business. The Company removes these inventories when they are used for repairs, maintenance, or capital projects.
 	 	
(f)	Property, Plant, and Equipment	
Property, plant, and equipment are stated at cost. Significant additions or improvements extending asset lives are capitalized as incurred, while repairs and maintenance that do not improve or extend the life of the respective asset are charged to expense as incurred. Depreciation is computed using the straight‑line method over the estimated useful lives of the assets. Certain assets and their related accumulated depreciation amounts are adjusted for asset retirements and disposals with the resulting gain or loss included in cost of operations on the statements of operations and comprehensive income. See note 4,  Property, Plant, and Equipment .
 	 	
(g)	Asset Impairments	
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 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 cost of operations in the statements of operations and comprehensive income. Fair values are determined by a variety of valuation methods, including third‑party appraisals, sales prices of similar assets, and present value techniques. There were no indicators of impairment loss as of December 31, 2015 and 2014.
 	 	
(h)	Debt Issuance Costs	
Debt issuance costs are capitalized and are amortized over the term of the related debt as a component of interest expense on a basis that approximates the effective‑interest method. Amortization expense included as part of interest expense in the statements of operations and comprehensive income was $197,000 and $469,000 for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015, the Company adopted Accounting Standards Update No. 2015‑03,  Interest - Imputation of Interest (Subtopic 835‑30): Simplifying the Presentation of Debt Issuance Costs  and, as a result, reclassified $4.3 million of debt issuance costs as of December 31, 2014 and $4.1 million as of December 31, 2015 to be presented as a direct deduction from the carrying amount of the related debt in both the current and prior periods.
 	 	
(i)	Notes Receivable	
As part of the Company’s obligations under its interconnection agreements, the Company paid the costs to construct certain interconnection facilities to allow the Facility to connect to the power grid. A portion of these costs is reimbursable from PG&E over a five‑year period beginning on the date of commercial operations, which was October 31, 2013. Accordingly, a note receivable was established for these costs and at December 31, 2015 and 2014, the balance was $29.7 million and $39.3 million, respectively. The

7

note accrues interest at a variable rate based on Federal Energy Regulatory Commission’s regulation at 18 C.F.R.§35.19a(a)(2)(iii), which was 3.25% at December 31, 2015.
 	 	
(j)	Income Taxes	
The Company is a disregarded entity of a partnership for federal and state income tax purposes. Therefore, federal and state income taxes are assessed at the partner level. Accordingly, no provision has been made for federal or state income taxes in the accompanying financial statements.
 	 	
(k)	Revenue Recognition	
All of the Company’s revenue is recognized as billable under the provisions of the PPA for energy delivered to PG&E, which has a term of 25 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 , or 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 PPA has no minimum lease payments and accordingly, all lease payments are recorded as contingent rent on an actual basis when the electricity is delivered.
 	 	
(l)	Derivative Financial Instruments	
The Company accounts for derivatives and hedging activities in accordance with ASC 815, Derivatives and Hedging , 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 attributable to the risk being hedged or recognized in accumulated other comprehensive income, or 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 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 forecasted transaction is not probable of occurring, or management chooses 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 record the derivative at its fair value on the balance sheet and recognizes any subsequent changes in 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 3,  Accounting for Derivative Instruments and Hedging Activities , for more information.
 	 	
(m)	Concentration of Credit Risk	
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of restricted cash, accounts receivable - trade, and notes receivable. Restricted cash is held in a bank deposit account. Accounts receivable are concentrated in the energy industry. The concentration within one industry may impact the Company’s overall exposure to credit risk, either positively or negatively, in that the customer may be similarly affected by changes in economic, industry, or other conditions. 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, PG&E, through a PPA. At December 31, 2015 and 2014, the accounts receivable balance with this customer totaled $3.6 million and $3.3 million, respectively. 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.

8

 	 	
(n)	Fair Value Measurements	
The Company accounts for the fair value of financial instruments in accordance with ASC 820, Fair Value Measurements and Disclosures , or ASC 820. The Company does not hold or issue financial instruments for trading purposes.
ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.
Level 2 - Inputs other than quoted prices included within Level 1that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
Level 3 - Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.
In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest-level input that is significant to the fair value measurement in its entirety.
The carrying amounts of cash, restricted cash, accounts receivable - trade, accounts payables - trade, accounts payable - affiliate, and other current liabilities approximate their fair value because of the short‑term maturity of these instruments and are classified as Level 1 within the fair value hierarchy.
The carrying value of notes receivable approximates fair value as it carries a variable interest rate. The carrying value of long‑term debt approximates fair value as recent borrowings were drawn at substantially similar interest rates. The fair value of notes receivable and long‑term debt is based on expected future cash flows discounted at market interest rates or current interest rates for similar instruments with equivalent credit quality, and are classified as Level 3 within the fair value hierarchy.
 	 	
(o)	Asset Retirement Obligations	
The Company accounts for its asset retirement obligations, or AROs, in accordance with ASC 410‑20,  Asset Retirement Obligations , or 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 the Company 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. See note 6,  Asset Retirement Obligations , for more information.
 	 	
(p)	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 and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used for such items as impairment of long‑lived assets, and contingencies among others.

9

(3) Accounting for Derivative Instruments and Hedging Activities
CVSR Interest Rate Swaption
Under the terms of the CVSR Financing Agreement, on November 17, 2011, the Company entered into a series of LIBOR‑based swaption agreements with a notional value of $686 million with certain counterparties in order to hedge the interest rate risk related to the CVSR Financing Agreement. The Company paid approximately $41.9 million in 2011 to execute these agreements. These swaptions mature over a series of seven scheduled settlement dates, which began in July 2012 and concluded in October 2013, to correspond with the completion dates of the project.
As of June 2013, the CVSR swaptions, designated as cash flow hedges, had a notional amount that exceeded the actual debt advances on the project. As such, the cash flow hedge accounting was discontinued for these contracts and $6 million of loss previously included in OCI was recognized in earnings for the year ended December 31, 2013. The remaining OCI balance, which represents the effective portion of the hedges at the date that cash flow hedge accounting was discontinued, will be amortized to interest expense over the term of the related debt.
Accumulated Other Comprehensive Loss
The following table summarizes the effects of the swaptions on the Company’s accumulated OCI balance, which reflects the amortization of the swaptions described above (in thousands):

Accumulated OCI balance at	 	 	
 	December 31, 2013	$	(31,218)  	
Amortization of swaptions to interest	 	 	
 	expense	 	 	 	2,257   	
Accumulated OCI balance at	 	 	
 	December 31, 2014	 	(28,961)  	
Amortization of swaptions to interest	 	 	
 	expense	 	 	 	2,124   	
Accumulated OCI balance at	 	 	
 	December 31, 2015	$	(26,837)  	
 	 	 	 	 	 	 	 	 	
As of December 31, 2015, $2,071 of losses are expected to be realized from OCI during the next 12 months.
(4) Property, Plant, and Equipment
At December 31, 2015 and 2014, major classes of property, plant, and equipment consist of the following (in thousands):

 	 	 	 	 	 	 	 	 	 	 	 	Depreciable	
 	 	 	 	 	 	 	 	2015	 	2014	 	lives	
Plant equipment	$	899,119   	 	880,357   	 	20–35 years	
Asset retirement obligation	 	3,073   	 	2,434   	 	30 years	
 	 	 	 	 	Total property, plant, and	 	 	 	 	 	 	
 	 	 	 	 	 	equipment	 	902,192   	 	882,791   	 	 	
Less accumulated depreciation	 	(80,638)  	 	(49,270)  	 	 	
 	 	 	 	 	Net property, plant, and	 	 	 	 	 	 	
 	 	 	 	 	 	equipment	$	821,554   	 	833,521   	 	 	

10

Through December 31, 2013, the Company applied for cash grants in lieu of investment tax credits from the U.S. Treasury Department in the amount of $413.7 million for the CVSR project, 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 $29.8 million reserve resulted in an increase in the book basis of the property, plant, and equipment.
In addition, as of December 31, 2013, the related deferred tax assets of $112.7 million recognizable by the Parent were assigned to the Company through the contributed capital account, and further reduced 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 $496.6 million at December 31, 2013.
In 2014, cash grant proceeds of $285 million were received from the U.S. Treasury. Liquidated damages related to the cash grant shortfall of $57.5 million were received from SunPower. SunPower also provided a $75 million indemnification to NRG under the Amended and Restated Purchase and Sale Agreement, or PSA, dated September 31, 2011. The indemnification states that SunPower shall indemnify NRG for an amount equal to ninety percent (90%) of the Treasury Grant that was not issued by the U.S. Department of Treasury.
The $75 million is receivable as the Company expects to fully recover the balance resulting from the current litigation with SunPower pursuant to the existing indemnity on the project. As of December 31, 2014, the sequestration amount was adjusted based on the actual cash grant awarded and the deferred tax asset was adjusted to $105.5 million, resulting in an increase in the book basis of the property, plant, and equipment. The change in the related deferred tax asset was recorded as an adjustment to NRG’s capital account.
In 2015, the $75 million receivable from SunPower was reclassified from cash grant receivable to other receivable. As a result, the deferred tax asset was adjusted down $19.5 million to $86 million, resulting in an increase in the book basis of the property, plant, and equipment.
(5) Long‑Term Debt
On September 30, 2011, the Company entered into the California Valley Solar Ranch Financing Agreement, or CVSR Financing Agreement, with the Federal Financing Bank, or FFB, to borrow up to $1.2 billion to fund the costs of constructing the Facility, which matures in September 2037. Amounts borrowed under the CVSR Financing Agreement accrue interest at a fixed rate based on U.S. Treasury rates determined at the time of the borrowing, plus a spread of 0.375%, and are secured by the assets of the Company. Interest rates on the Company’s debt range from 2.339% to 3.775%. Funding requests were submitted to the FFB on a monthly basis and the loans provided by the FFB are guaranteed by the U.S. Department of Energy. As of December 31, 2015 and 2014, there was $793 million and $815 million outstanding under this agreement, respectively.
Long‑term debt maturities at December 31, 2015 are summarized as follows (in thousands):

2016	 	 	 	 	$	22,652   	
2017	 	 	 	 	 	24,470   	
2018	 	 	 	 	 	26,230   	
2019	 	 	 	 	 	23,886   	
2020	 	 	 	 	 	21,262   	
Thereafter	 	 	 	674,974   	
 	 	 	 	 	Total	$	793,474   	

11

(6) Asset Retirement Obligation
The Company’s ARO is the estimated cost to remove the above ground solar equipment and restore the site to conditions similar to the surrounding parcels.
The following table presents the balance of the ARO obligation as of December 31, 2015 and 2014, along with revisions to estimates and accretion expense related to the Company’s ARO for the year ended December 31, 2015 (in thousands):

Balance as of December 31, 2014	$	2,806   	
Revisions to ARO estimates	 	639   	
Accretion expense	 	380   	
Balance as of December 31, 2015	$	3,825   	
 	 	 	 	 	 	 	 	 	
(7) Related‑Party Transactions
In August 2013, NRG provided $34 million to CVSR for the repayment of the first bridge loan. In April 2014, the $34 million payable to affiliate was reclassified from accounts payable - affiliate on the accompanying balance sheet to an equity contribution.
On September 30, 2011, the Company entered into an Operations and Maintenance agreement with NRG Energy Services LLC, a wholly owned subsidiary of NRG. On July 15, 2015, this agreement was assumed by NRG Renew Operation & Maintenance LLC. See note 1,  Nature of Business , for further discussion.
(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.
Lease Commitment
On September 30, 2011, the Company entered into a solar facility ground lease with High Plains Ranch IV, LLC to lease certain real property and real property interests in the County of San Luis Obispo, California for an initial term of 30 years with the option for four renewal terms of up to five years each.
This lease agreement includes scheduled rent increases. The Company recognizes the scheduled rent increases on a straight‑line basis over the lease term. Lease expense charged to cost of operations in 2015 and 2014 was $1.3 million and $1.3 million, respectively. The deferred rent is located in other noncurrent liabilities with a balance of $2.5 million and $2.3 million at December 30, 2015 and 2014, respectively.
On August 10, 2015, the lease was amended, resulting in the Company being responsible for all property taxes on the improvements to the property being leased. The landlord paid the Company $1.5 million for future taxes for the underlying value of the property itself. This amount is held in other current and other noncurrent liabilities and is being amortized straight line over the 28 years remaining on the lease against the property tax expense.

12

The following table summarizes the Company’s future minimum noncancelable lease commitments as of December 31, 2015 (in thousands):

2016	 	 	 	 	$	1,207   	
2017	 	 	 	 	 	1,228   	
2018	 	 	 	 	 	1,249   	
2019	 	 	 	 	 	1,271   	
2020	 	 	 	 	 	1,293   	
Thereafter	 	 	 	30,326   	
 	 	 	 	 	Total	$	36,574   	
 	 	 	 	 	 	 	 	 	
(9) Subsequent Events
In connection with the SunPower litigation described in Note 4, Property, Plant and Equipment, it was determined that SunPower overpaid for liquidated damages by $7 million. Accordingly, during 2016, the Company recorded a payable to SunPower for $7 million with a corresponding increase to the related property, plant and equipment.
On April 18, 2016, CVSR Holdco LLC was created whereas NRG Yield Operating LLC owns 48.95% and NRG Solar CVSR Holdings 2 LLC owns 51.05% of the entity. CVSR Holdco LLC owns 100% of NRG Solar CVSR Holdings LLC, which in turn owns 100% of the Company.
On July 15, 2016, CVSR Holdco LLC, issued $200 million of senior secured notes that bear interest at 4.68% and mature on March 31, 2037.  Interest on the notes is payable semi-annually on March 31 and September 30 of each year, and commence on September 30, 2016. Net proceeds were distributed to NRG Yield Operating LLC and NRG based on the ownership as of July 15, 2016.
On September 1, 2016, NRG Yield Operating LLC acquired the remaining 51.05% of the Company, through its acquisition of membership interests in CVSR Holdco LLC. In connection with the purchase and sale agreement and prior to close of the transaction, the $75 million receivable and $7 million payable resulting from the litigation with SunPower were transferred to NRG as a net reduction to its ownership interest in the Company.
The Company has evaluated subsequent events from the balance sheet date through September 6, 2016, the date at which the financial statements were available to be issued, and determined that there are no other items to disclose.

13

Exhibit 99.2
HIGH PLAINS RANCH II, LLC
Financial Statements
As of June 30, 2016 and for the six months ended June 30, 2016 and 2015

HIGH PLAINS RANCH II, LLC

Table of Contents

 	
 	 	
 	Page(s)	
Balance Sheets	1	
 	 	
Statement of Income and Comprehensive Income	2	
 	 	
Statements of Cash Flows	3	
 	 	
Notes to Financial Statements	4-5	

 	
 	 	 	 	 	 	 	 	 	 	 	
HIGH PLAINS RANCH II, LLC	
Balance Sheets	
(In thousands)	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	June 30, 2016	 	December 31, 2015	
 	 	 	 	 	 	 	 	(unaudited)	 	 	
Assets	 	 	 	 	
Current assets:	 	 	 	 	
 	Cash	 	 	 	$	3	 	45	
 	Restricted cash	 	68,324	 	82,725	
 	Accounts receivable – trade	 	11,968	 	3,648	
 	Notes receivable	 	9,623	 	9,623	
 	Spare parts inventory	 	1,062	 	1,079	
 	Prepayments and other current assets	 	643	 	1,308	
 	 	Total current assets	 	 	91,623	 	98,428	
Property, plant, and equipment, net of accumulated depreciation of $96,439 and $80,638	813,262	 	821,554	
Other assets:	 	 	 	 	 	
 	Notes receivable	 	15,237	 	20,049	
 	Other receivable - SunPower indemnity	 	75,000	 	75,000	
 	 	Total other assets	 	90,237	 	95,049	
 	 	Total assets	$	995,122	 	1,015,031	
Liabilities and Members’ Equity	 	 	 	 	
Current liabilities:	 	 	 	 	
 	Current portion of long-term debt	$	23,548   	 	22,652   	
 	Accounts payable – trade	 	536   	 	384   	
 	Accounts payable – affiliate	 	807   	 	1,099   	
 	Accrued interest expense	 	8,835   	 	9,105   	
 	Other current liabilities	 	92   	 	82   	
 	 	Total current liabilities	 	33,818   	 	33,322   	
Other liabilities:	 	 	 	 	
 	Long-term debt	 	752,837   	 	766,673   	
 	Asset retirement obligation	 	3,988   	 	3,825   	
 	Other non-current liabilities	 	11,500   	 	3,918   	
 	 	Total non-current liabilities	 	768,325   	 	774,416   	
 	 	Total liabilities	 	802,143   	 	807,738   	
Commitments and Contingencies	 	 	 	 	
Member’s equity	 	192,979   	 	207,293   	
 	 	Total liabilities and members’ equity	$	995,122   	 	1,015,031   	
See accompanying notes to financial statements.	

1

 	
 	 	 	 	 	 	 	 	 	 	 	 	
HIGH PLAINS RANCH II, LLC	
Statements of Operations and Comprehensive Income	
(In thousands)	
(unaudited)	
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	Six months ended June 30, 2016	 	Six months ended June 30, 2015	
Operating revenues	 	 	 	 	 	
 	 	Total operating revenues	 	$	39,360	 	38,619	
Operating costs and expenses:	 	 	 	 	 	
 	Cost of operations	 	 	4,004	 	5,187	
 	Depreciation and accretion expense	 	 	15,964	 	15,670	
 	 	Total operating costs and expenses	 	19,968	 	20,857	
 	 	Operating income	 	 	19,392	 	17,762	
Other income (expense):	 	 	 	 	 	
 	Interest income	 	 	435	 	597	
 	Interest expense	 	 	(12,109)	 	(12,376)	
 	 	Total other expense	 	 	(11,674)	 	(11,779)	
 	 	Net income	 	 	7,718	 	5,983	
Other comprehensive income:	 	 	 	 	 	
 	Unrealized income on derivatives	 	 	1,036	 	1,059	
 	 	Other comprehensive income	 	 	1,036	 	1,059	
 	 	Comprehensive income	 	$	8,754	 	7,042	
See accompanying notes to financial statements.	

2

 	
 	 	 	 	 	 	 	 	 	 	 	
HIGH PLAINS RANCH II, LLC	
Statements of Cash Flows	
(In thousands)	
(unaudited)	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	Six months ended June 30, 2016	 	Six months ended June 30, 2015	
Cash flows from operating activities:	 	 	 	 	
 	Net income	 	$	7,718	 	5,983	
 	Adjustments to reconcile net income to net cash provided by operating activities:	 	 	
 	 	Depreciation expense	 	15,801	 	15,539	
 	 	Accretion of asset retirement obligation	 	163	 	131	
 	 	Amortization of debt issuance costs	 	97	 	98	
 	 	Amortization of swaption premiums	 	1,036	 	1,059	
 	Cash (used) provided by changes in other working capital:	 	 	 	 	
 	 	Accounts receivable – trade	 	(8,320)	 	(7,920)	
 	 	Spare parts inventory	 	17	 	(709)	
 	 	Prepayments and other current assets	 	665	 	765	
 	 	Accounts payable – trade	 	(663)	 	(55)	
 	 	Accounts payable – affiliate	 	(292)	 	(386)	
 	 	Non-current liabilities	 	628	 	1,338	
 	 	 	Net cash provided by operating activities	 	16,850	 	15,843	
Cash flows from investing activities:	 	 	 	 	
 	Capital expenditures	 	0	 	(520)	
 	Decrease in note receivable	 	4,812	 	4,851	
 	Decrease in restricted cash	 	14,401	 	14,737	
 	 	 	Net cash provided by (used in) investing activities	 	19,213	 	19,068	
Cash flows from financing activities:	 	 	 	 	
 	Payments for long-term debt	 	(13,037)	 	(12,173)	
 	Dividend paid/return of capital to members	 	(23,068)	 	(22,738)	
 	 	 	Net cash (used in) provided by financing activities	 	(36,105)	 	(34,911)	
 	 	 	Net change in cash	 	(42)	 	0	
Cash, beginning of period	 	45	 	228	
Cash, end of period	$	3	 	228	
See accompanying notes to financial statements.	

3

HIGH PLAINS RANCH II, LLC
Notes to Financial Statements
June 30, 2016
 	 	
(1)	Nature of Business	
High Plains Ranch II, LLC, or the Company, a Delaware limited liability company, was a wholly owned subsidiary of NRG Solar CVSR Holdings, LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Solar Sunrise, LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Renew LLC, or NRG Renew, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Repowering Holdings LLC, a Delaware limited liability company, which is a wholly owned subsidiary of NRG Energy, Inc., or NRG or the Parent.
The Company was organized to develop, construct, and own a 250‑megawatt, or MW, photovoltaic solar facility located in San Luis Obispo County, California known as California Valley Solar Ranch, or CVSR or the Facility. CVSR sells electricity to Pacific Gas & Electric Co., or PG&E, an electric utility based in San Francisco, California, under two 25-year power purchase agreements, or PPA, one for 210 MW and the other for 40 MW for resale to its customers.
On February 13, 2013, NRG Solar Sunrise, LLC assigned 51.05% of its membership shares in the Company to NRG Solar CVSR Holdings 2, LLC, a wholly owned subsidiary of NRG Solar Sunrise, LLC. On July 22, 2013, NRG Solar CVSR Holdings, LLC assigned 48.95% of its interest in the Company to NRG Yield Operating LLC, a consolidated subsidiary of NRG Yield LLC. NRG Yield, Inc. owns 44.7% of NRG Yield LLC and NRG owns the remaining portion. During 2016, CVSR Holdco LLC was formed to own NRG Solar CVSR Holdings, LLC. On September 1, 2016, as further described in Note 3,  Subsequent Events , NRG Yield Operating LLC acquired the remaining 51.05% interest in the Company through its acquisition of 51.05% of CVSR Holdco LLC.
Operations commenced on the first 22 MW phase in September 2012 and 105 MWs for phases two and four in December 2012. For the completion of the final phase, 21 MWs commenced operation in the third quarter of 2013 and 102 MWs commenced operation on October 31, 2013.
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 of a full year.
 	 	
(2)	Accounting for Derivative Instruments and Hedging Activities	
CVSR Interest Rate Swaption
The Company continues to amortize to interest expense the frozen OCI representing the value of the CVSR swaptions, previously designated as cash flow hedges, at the point when cash flow hedge accounting was discontinued. The Company will amortize the remaining amount over the term of the related debt. The swaps matured on dates ending in 2013.

4

Accumulated Other Comprehensive Loss
The following table summarizes the effects of the swaptions on the Company’s accumulated OCI balance, which reflects the amortization of the swaptions described above (in thousands):

Accumulated OCI balance at	 	 	
 	December 31, 2015	$	(26,837)  	
Amortization of swaptions to interest	 	 	
 	expense	 	 	 	1,036   	
Accumulated OCI balance at	 	 	
 	June 30, 2016	$	(25,801)  	

 	 	
(3)	Subsequent Events	
On April 18, 2016, CVSR Holdco LLC was created whereas NRG Yield Operating LLC owns 48.95% and NRG Solar CVSR Holdings 2 LLC owns 51.05% of the entity. CVSR Holdco LLC owns 100% of NRG Solar CVSR Holdings LLC, which in turn owns 100% of the Company.
On July 15, 2016, CVSR Holdco LLC, issued $200 million of senior secured notes that bear interest at 4.68% and mature on March 31, 2037.  Interest on the notes is payable semi-annually on March 31 and September 30 of each year, and commence on September 30, 2016. Net proceeds were distributed to NRG Yield Operating LLC and NRG based on the ownership as of July 15, 2016.
On September 1, 2016, NRG Yield Operating LLC acquired the remaining 51.05% of the Company, through its acquisition of membership interests in CVSR Holdco LLC. In connection with the purchase and sale agreement and prior to close of the transaction, the $75 million receivable and $7 million payable resulting from the litigation with SunPower were transferred to NRG as a net reduction to its ownership interest in the Company.
The Company has evaluated subsequent events from the balance sheet date through September 6, 2016, the date at which the financial statements were available to be issued, and determined that there are no other items to disclose.

5

Exhibit 99.3

Unaudited Pro Forma Consolidated Combined Financial Statements

The Unaudited Pro Forma Consolidated Combined Financial Statements, (the “pro forma financial statements”) combine the historical consolidated financial statements of NRG Yield, Inc., or the Company, and the financial statements of the entity that was acquired by the Company to illustrate the potential effect of the acquisition. The Company acquired the remaining 51.05% interest in CVSR Holdco LLC ("CVSR"), which indirectly owns the CVSR solar facility through its ownership of High Plains Ranch II, LLC, from NRG Solar CVSR Holdings 2 LLC, a wholly-owned subsidiary of NRG Energy, Inc.

The pro forma financial statements are based on, and should be read in conjunction with, the:
•accompanying notes to the Unaudited Pro Forma Consolidated Combined Financial Statements;
•consolidated financial statements of the Company for the year ended December 31, 2015 and for the six months ended June 30, 2016, and the notes relating thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016; and
•financial statements of High Plains Ranch II, LLC for the year ended December 31, 2015, and for the six months ended June 30, 2016, and the notes relating thereto included within Exhibits 99.1 and 99.2 to this Form 8-K.

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 the remaining 51.05% of CVSR, (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 Consolidated Combined Statements of Operations or the pro forma statement of operations, for the year ended December 31, 2015, and for the six months ended June 30, 2016, give effect to the acquisition as if it occurred on January 1, 2015. The Unaudited Pro Forma Consolidated Combined Balance Sheet, or the pro forma balance sheet, as of June 30, 2016, gives effect to the acquisition as if it occurred on June 30, 2016.

CVSR was acquired by NRG on September 30, 2011, and NRG applied the acquisition method of accounting and recorded the acquired assets and liabilities at fair market value on the date of the acquisition. As CVSR and the Company are under common control, all of the assets were transferred to the Company at historical carrying value.

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 acquisition of the remaining 51.05% of CVSR been completed on the date indicated. The Company could incur significant costs to integrate the business. 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 Consolidated Combined Income Statement
Six Months Ended June 30, 2016

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(In millions, except per share amounts)	NRG Yield, Inc. Historical	 	CVSR	 	Pro Forma Adjustments	 	NRG Yield, Inc. Pro Forma	
Operating Revenues	 	 	 	 	 	 	
Total operating revenues	$	478	
 	 	$	39	
 	 	$	—	
 	 	$	517	
 	
Operating Costs and Expenses	 	 	 	 	 	 	 	
Cost of operations	158	
 	 	4	
 	 	—	
 	 	162	
 	
Depreciation and amortization	133	
 	 	16	
 	 	—	
 	 	149	
 	
General and administrative	6	
 	 	—	
 	 	—	
 	 	6	
 	
Total operating costs and expenses	297	
 	 	20	
 	 	—	
 	 	317	
 	
Operating Income	181	
 	 	19	
 	 	—	
 	 	200	
 	
Other Income (Expense)	 	 	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	20	
 	 	—	
 	 	(4	)	(a)	16	
 	
Other income, net	1	
 	 	1	
 	 	—	
 	 	2	
 	
Loss on debt extinguishment	—	
 	 	—	
 	 	—	
 	 	—	
 	
Interest expense	(130	)	 	(12	)	 	(3	)	(b)	(145	)	
Total other expense, net	(109	)	 	(11	)	 	(7	)	 	(127	)	
Income Before Income Taxes	72	
 	 	8	
 	 	(7	)	 	73	
 	
Income tax expense	12	
 	 	—	
 	 	—	
 	 	12	
 	
Net Income	60	
 	 	8	
 	 	(7	)	 	61	
 	
Less: Pre-acquisition net loss of Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	
Net Income Excluding Pre-acquisition Net Loss of Drop Down Assets	60	
 	 	8	
 	 	(7	)	 	61	
 	
Less: Net income attributable to noncontrolling interests	23	
 	 	—	
 	 	—	
 	 	23	
 	
Net Income Attributable to NRG Yield, Inc.	$	37	
 	 	$	8	
 	 	$	(7	)	 	$	38	
 	
Earnings Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders	 	 	 	 	 	 	 	
Weighted average number of Class A common shares outstanding - basic	35	
 	 	 	 	 	 	35	
 	
Weighted average number of Class A common shares outstanding - diluted	35	
 	 	 	 	 	 	50	
 	
Weighted average number of Class C common shares outstanding - basic and diluted	63	
 	 	 	 	 	 	63	
 	
Earnings per Weighted Average Class A and Class C Common Share - Basic	$	0.38	
 	 	 	 	 	 	$	0.39	
 	
Earnings per Weighted Average Class A Common Share - Diluted	0.38	
 	 	 	 	 	 	0.37	
 	
Earnings per Weighted Average Class C Common Share - Diluted	0.38	
 	 	 	 	 	 	0.39	

Unaudited Pro Forma Consolidated Combined Income Statement
Year Ended December 31, 2015

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(In millions, except per share amounts)	NRG Yield, Inc. Historical	 	CVSR	 	Pro Forma Adjustments	 	NRG Yield, Inc. Pro Forma	
Operating Revenues	 	 	 	 	 	 	
Total operating revenues	$	869	
 	 	$	84	
 	 	$	—	
 	 	$	953	
 	
Operating Costs and Expenses	 	 	 	 	 	 	 	
Cost of operations	312	
 	 	9	
 	 	—	
 	 	321	
 	
Depreciation and amortization	265	
 	 	32	
 	 	—	
 	 	297	
 	
General and administrative	12	
 	 	—	
 	 	—	
 	 	12	
 	
Acquisition-related transaction and integration costs	3	
 	 	—	
 	 	—	
 	 	3	
 	
Total operating costs and expenses	592	
 	 	41	
 	 	—	
 	 	633	
 	
Operating Income	277	
 	 	43	
 	 	—	
 	 	320	
 	
Other Income (Expense)	 	 	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	35	
 	 	—	
 	 	(9	)	(a)	26	
 	
Other income, net	2	
 	 	1	
 	 	—	
 	 	3	
 	
Loss on debt extinguishment	(9	)	 	—	
 	 	—	
 	 	(9	)	
Interest expense	(238	)	 	(25	)	 	(5	)	(b)	(268	)	
Total other expense, net	(210	)	 	(24	)	 	(14	)	 	(248	)	
Income Before Income Taxes	67	
 	 	19	
 	 	(14	)	 	72	
 	
Income tax expense	12	
 	 	—	
 	 	1	
 	(c)	13	
 	
Net Income	55	
 	 	19	
 	 	(15	)	 	59	
 	
Less: Pre-acquisition net loss of Drop Down Assets	(20	)	 	—	
 	 	—	
 	 	(20	)	
Net Income Excluding Pre-acquisition Net Loss of Drop Down Assets	75	
 	 	19	
 	 	(15	)	 	79	
 	
Less: Net income attributable to noncontrolling interests	42	
 	 	 	 	2	
 	(d)	44	
 	
Net Income Attributable to NRG Yield, Inc.	$	33	
 	 	$	19	
 	 	$	(17	)	 	$	35	
 	
Earnings Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders	 	 	 	 	 	 	 	
Weighted average number of Class A common shares outstanding - basic and diluted	35	
 	 	 	 	 	 	35	
 	
Weighted average number of Class C common shares outstanding - basic and diluted	49	
 	 	 	 	 	 	49	
 	
Earnings per Weighted Average Class A - Basic and Diluted	$	0.40	
 	 	 	 	 	 	$	0.41	
 	
Earnings per Weighted Average Class C Common Share - Basic and Diluted	$	0.40	
 	 	 	 	 	 	$	0.42	

Unaudited Pro Forma Consolidated Combined Balance Sheet
As of June 30, 2016

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(In millions)	NRG Yield, Inc. Historical	 	CVSR	 	Pro Forma Adjustments	 	 	NRG Yield, Inc. Pro Forma	
ASSETS	 	 	 	 	 	 	 	 	
Current Assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	$	89	
 	 	$	—	
 	 	$	(4	)	(e), (f)	 	$	85	
 	
Restricted cash	55	
 	 	68	
 	 	—	
 	 	 	123	
 	
Accounts receivable — trade	109	
 	 	12	
 	 	—	
 	 	 	121	
 	
Accounts receivable — affiliate	1	
 	 	—	
 	 	—	
 	 	 	1	
 	
Inventory	35	
 	 	1	
 	 	—	
 	 	 	36	
 	
Derivative instruments	1	
 	 	—	
 	 	—	
 	 	 	1	
 	
Notes receivable	7	
 	 	10	
 	 	—	
 	 	 	17	
 	
Prepayments and other current assets	22	
 	 	1	
 	 	—	
 	 	 	23	
 	
Total current assets	319	
 	 	92	
 	 	(4	)	 	 	407	
 	
Property, plant and equipment, net of accumulated depreciation of $832 and $701	4,947	
 	 	814	
 	 	—	
 	 	 	5,761	
 	
Other Assets	 	 	 	 	 	 	 	—	
 	
Equity investments in affiliates	778	
 	 	—	
 	 	(95	)	(a)	 	683	
 	
Notes receivable	6	
 	 	15	
 	 	—	
 	 	 	21	
 	
Intangible assets, net of accumulated amortization of $132 and $93	1,321	
 	 	—	
 	 	—	
 	 	 	1,321	
 	
Deferred income taxes	170	
 	 	—	
 	 	—	
 	 	 	170	
 	
Other non-current assets	66	
 	 	75	
 	 	(75	)	(g)	 	66	
 	
Total other assets	2,341	
 	 	90	
 	 	(170	)	 	 	2,261	
 	
Total Assets	$	7,607	
 	 	$	996	
 	 	$	(174	)	 	 	$	8,429	
 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
Current Liabilities	 	
 	 	 	 	 	 	 	 	
Current portion of long-term debt	$	251	
 	 	$	23	
 	 	$	(125	)	(b)	 	$	149	
 	
Accounts payable — trade	21	
 	 	1	
 	 	—	
 	 	 	22	
 	
Accounts payable — affiliate	32	
 	 	1	
 	 	—	
 	 	 	33	
 	
Derivative instruments	37	
 	 	—	
 	 	—	
 	 	 	37	
 	
Accrued expenses and other current liabilities	39	
 	 	9	
 	 	(7	)	(g)	 	41	
 	
Total current liabilities	380	
 	 	34	
 	 	(132	)	 	 	282	
 	
Other Liabilities	 	 	 	 	 	 	 	 	
Long-term debt	4,465	
 	 	753	
 	 	200	
 	(e)	 	5,418	
 	
Accounts payable — affiliate	20	
 	 	—	
 	 	—	
 	 	 	20	
 	
Derivative instruments	122	
 	 	—	
 	 	—	
 	 	 	122	
 	
Other non-current liabilities	63	
 	 	16	
 	 	—	
 	 	 	79	
 	
Total non-current liabilities	4,670	
 	 	769	
 	 	200	
 	 	 	5,639	
 	
Total Liabilities	5,050	
 	 	803	
 	 	68	
 	 	 	5,921	
 	
Commitments and Contingencies	 	 	 	 	 	 	 	 	
Stockholders' Equity	 	 	 	 	 	 	 	 	
Common Stock	1	
 	 	—	
 	 	 	 	 	1	
 	
Additional paid-in capital	1,835	
 	 	219	
 	 	(219	)	(h)	 	1,835	
 	
Retained earnings	26	
 	 	—	
 	 	 	 	 	26	
 	
Accumulated other comprehensive loss	(47	)	 	(26	)	 	12	
 	(h)	 	(61	)	
Noncontrolling interest	742	
 	 	—	
 	 	(35	)	(g), (h)	 	707	
 	
Total Stockholders' Equity	2,557	
 	 	193	
 	 	(242	)	 	 	2,508	
 	
Total Liabilities and Stockholders' Equity	$	7,607	
 	 	$	996	
 	 	$	(174	)	 	 	$	8,429	

Notes to the Unaudited Pro Forma Consolidated Combined Financial Statements

(a) Represents the removal of the equity-method investment and related equity earnings associated with the Company's historical 48.95% ownership of CVSR.
(b) Reflects the estimated net increase in interest expense for borrowings necessary to fund the purchase price of the acquisition. To fund the purchase price of the acquisition, in July 2016 CVSR Holdco, the indirect owner of the CVSR project, issued $200 million of senior unsecured notes that bear interest at 4.68% and mature on March 31, 2037.
(c) Represents the adjustment to record the tax effect of the increase in net income resulting from the acquisition of the remaining 51.05% interest in CVSR, partially offset by the increase in interest expense and the increase in noncontrolling interest, calculated utilizing the Company’s estimated combined statutory federal and state tax rate of 40.0%.
(d) Represents the adjustment to record noncontrolling interest associated with the results of the acquisition of the remaining 51.05% interest in CVSR in Yield Inc.'s results.
(e) Represents the cash received from the $200 million financing borrowings necessary to fund the purchase price of the acquisition. To fund the purchase price of the acquisition, in July 2016 CVSR Holdco, the indirect owner of the CVSR project, issued $200 million of senior unsecured notes. Net proceeds of $97.5 million were distributed to NRG Yield Operating LLC based on its historical pro rata ownership. The Company used its net proceeds of $97.5 million along with $28 million of cash on hand, to reduce borrowings under the Company's revolving credit facility, resulting in a net cash increase of $75 million.
(f) Represents cash of $78.5 million utilized to fund the purchase price of the remaining 51.05% interest in CVSR.
(g) The agreement between NRG and the Company for the acquisition specified that all amounts related to the litigation with SunPower, as further described in Note 2,  Summary of Significant Accounting Policies , to the Company's audited financial statements, are excluded from the acquisition. Accordingly, prior to close of the transaction, the $75 million receivable and $7 million payable were transferred to NRG as a net reduction to its ownership interest in CVSR.
(h) Represents the adjustment to reclassify the equity of the acquired 51.05% interest in CVSR 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.

Exhibit 99.4
Item 6 — Selected Financial Data
The following table presents the Company's historical selected financial data, which has been recast to include the remaining 51.05% interest in CVSR Holdco LLC acquired by Yield Operating LLC on September 1, 2016, as if the transfer had taken place from the date the respective entity was under common control, which was September 30, 2011. The acquisition is further described in  Item 15  —  Note 3,  Business Acquisitions , to the Consolidated Financial Statements. Additionally, for all periods prior to the initial public offering, the data below reflects the Company's accounting predecessor, or NRG Yield, the financial statements of which were prepared on a ''carve-out'' basis from NRG and are intended to represent the financial results of the contracted renewable energy and conventional generation and thermal infrastructure assets in the U.S. that were acquired by NRG Yield LLC on July 22, 2013. For all periods subsequent to the initial public offering, the data below reflects the Company's consolidated financial results.
This historical data should be read in conjunction with the Consolidated Financial Statements and the related notes thereto in Item 15 and Item 7,  Management's Discussion and Analysis of Financial Condition and Results of Operations.

1

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Fiscal year ended December 31,	
(In millions, except per share data)	2015	 	2014	 	2013	 	2012	 	2011	
Statement of Income Data:	 	 	 	
Operating Revenues	 	 	 	 	 	 	 	 	 	
Total operating revenues	$	953	
 	 	$	828	
 	 	$	434	
 	 	$	186	
 	 	$	173	
 	
Operating Costs and Expenses	 	 	 	 	 	 	 	 	 	
Cost of operations	321	
 	 	277	
 	 	154	
 	 	118	
 	 	112	
 	
Depreciation and amortization	297	
 	 	233	
 	 	92	
 	 	39	
 	 	35	
 	
General and administrative	12	
 	 	8	
 	 	7	
 	 	7	
 	 	6	
 	
Acquisition-related transaction and integration costs	3	
 	 	4	
 	 	—	
 	 	—	
 	 	—	
 	
Total operating costs and expenses	633	
 	 	522	
 	 	253	
 	 	164	
 	 	153	
 	
Operating Income	320	
 	 	306	
 	 	181	
 	 	22	
 	 	20	
 	
Other Income (Expense)	 	 	 	 	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	26	
 	 	17	
 	 	20	
 	 	19	
 	 	13	
 	
Other income, net	3	
 	 	6	
 	 	4	
 	 	3	
 	 	2	
 	
Loss on extinguishment of debt	(9	)	 	(1	)	 	—	
 	 	—	
 	 	—	
 	
Interest expense	(263	)	 	(216	)	 	(72	)	 	(29	)	 	(21	)	
Total other expense, net	(243	)	 	(194	)	 	(48	)	 	(7	)	 	(6	)	
Income Before Income Taxes	77	
 	 	112	
 	 	133	
 	 	15	
 	 	14	
 	
Income tax expense	12	
 	 	4	
 	 	8	
 	 	10	
 	 	9	
 	
Net Income	65	
 	 	108	
 	 	125	
 	 	$	5	
 	 	$	5	
 	
Less: Pre-acquisition net (loss) income of Drop Down Assets	(10	)	 	44	
 	 	16	
 	 	 	 	 	
Net Income Excluding Pre-acquisition Net (Loss) Income of Drop Down Assets	75	
 	 	64	
 	 	109	
 	 	 	 	 	
Less: Predecessor income prior to initial public offering on July 22, 2013	—	
 	 	—	
 	 	54	
 	 	 	 	 	
Less: Net income attributable to noncontrolling interests	42	
 	 	48	
 	 	42	
 	 	 	 	 	
Net Income Attributable to NRG Yield, Inc.	$	33	
 	 	$	16	
 	 	$	13	
 	 	 	 	 	
Earnings Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders	 	 	 	 	 	 	 	 	 	
Earnings per Weighted Average Class A and Class C Common Share - Basic and Diluted	$	0.40	
 	 	$	0.30	
 	 	$	0.29	
 	 	N/A	
 	 	N/A	
 	
Dividends per Class A common share (a)	$	1.015	
 	 	$	1.42	
 	 	$	0.23	
 	 	N/A	
 	 	N/A	
 	
Dividends per Class C common share (a)	0.625	
 	 	N/A	
 	 	N/A	
 	 	N/A	
 	 	N/A	
 	
Other Financial Data:	 	 	 	 	 	 	 	 	 	
  Capital expenditures	$	29	
 	 	$	60	
 	 	$	782	
 	 	$	1,398	
 	 	$	466	
 	
Cash Flow Data:	 	 	 	 	 	 	 	 	 	
  Net cash provided by (used in):	 	 	 	 	 	 	 	 	 	
    Operating activities	$	405	
 	 	$	362	
 	 	$	168	
 	 	$	57	
 	 	$	32	
 	
    Investing activities	(1,108	)	 	(739	)	 	(965	)	 	(1,421	)	 	(495	)	
    Financing activities	385	
 	 	747	
 	 	834	
 	 	1,362	
 	 	454	
 	
Balance Sheet Data (at period end):	 	 	 	 	 	 	 	 	 	
  Cash and cash equivalents	$	111	
 	 	$	429	
 	 	$	59	
 	 	$	22	
 	 	$	24	
 	
  Property, plant and equipment, net	5,878	
 	 	6,009	
 	 	3,388	
 	 	3,392	
 	 	1,290	
 	
  Total assets	8,689	
 	 	8,794	
 	 	4,717	
 	 	3,790	
 	 	1,636	
 	
  Long-term debt, including current maturities	5,593	
 	 	5,731	
 	 	2,849	
 	 	1,880	
 	 	445	
 	
  Total liabilities	5,951	
 	 	6,062	
 	 	3,129	
 	 	2,449	
 	 	743	
 	
  Total stockholders' equity	2,738	
 	 	2,732	
 	 	1,588	
 	 	1,341	
 	 	893	

 	

(a)  The Company began paying dividends on Class A common stock after the initial public offering on July 22, 2013. The Company began paying dividends on Class C common stock after the Recapitalization on May 14, 2015.

2

Exhibit 99.5
Item 7 — Management's Discussion and Analysis of Financial Condition and the Results of Operations

The following discussion analyzes the Company's historical financial condition and results of operations, which were recast to include the effect of the June 2014 Drop Down Assets, the January 2015 Drop Down Assets, the November 2015 Drop Down Assets and the CVSR Drop Down, which were acquired on June 30, 2014, January 2, 2015, November 3, 2015 and September 1, 2016, respectively. As further discussed in Item 15 — Note 1,  Nature of Business , to the Consolidated Financial Statements, the purchases of these assets were accounted for in accordance with ASC 805-50 , Business Combinations - Related Issues , whereas the assets and liabilities transferred to the Company relate to interests under common control by NRG and, accordingly, were recorded at historical cost. The difference between the cash proceeds and historical value of the net assets was recorded as a distribution to/from NRG and offset to the noncontrolling interest. The guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Accordingly, the Company prepared its consolidated financial statements to reflect the transfers as if they had taken place from the beginning of the financial statements period (January 1, 2013), or from the date the entities were under common control (if later than the beginning of the financial statements period). The financial statements reflect the transfers as if they had taken place on May 13, 2013, for Kansas South, March 28, 2013, for TA High Desert and April 1, 2014, for the January 2015 Drop Down Assets and the majority of the November 2015 Drop Down Assets, which represents the date these entities were acquired by NRG. The Company reduces net income attributable to its Class A and Class C common stockholders by the pre-acquisition net income for the Drop Down Assets, as it is not available to the stockholders.
In addition, for all periods prior to the initial public offering, the discussion reflects the Company's accounting predecessor, NRG Yield, the financial statements of which were prepared on a ''carve-out'' basis from NRG and are intended to represent the financial results of the contracted renewable energy and conventional generation and thermal infrastructure assets in the U.S. that were acquired by NRG Yield LLC on July 22, 2013. For all periods subsequent to the initial public offering, the discussion reflects the Company's consolidated financial results.
As you read this discussion and analysis, refer to the Company's recast Consolidated Statements of Operations to this Form 8-K, which present the results of operations for the years ended December 31, 2015, 2014 and 2013. Also refer to Item 1 —  Business  and Item 1A —  Risk Factors , to the Company's 2015 Form 10-K, which include detailed discussions of various items impacting the Company's business, results of operations and financial condition.
The discussion and analysis below has been organized as follows:
 	 	
•	Executive Summary, including a description of the business and significant events that are important to understanding the results of operations and financial condition;	
 	 	
•	Results of operations, including an explanation of significant differences between the periods in the specific line items of the consolidated statements of operations;	
 	 	
•	Financial condition addressing liquidity position, sources and uses of cash, capital resources and requirements, commitments, and off-balance sheet arrangements;	
 	 	
•	Known trends that may affect the Company’s results of operations and financial condition in the future; and	
 	 	
•	Critical accounting policies which are most important to both the portrayal of the Company's financial condition and results of operations, and which require management's most difficult, subjective or complex judgment.	

1

Executive Summary
Introduction and Overview
The Company is a dividend growth-oriented company formed to serve as the primary vehicle through which NRG owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. The Company believes it is well positioned to be a premier company for investors seeking stable and growing dividend income from a diversified portfolio of lower-risk high-quality assets.
The Company owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the U.S. The Company’s contracted generation portfolio collectively represents  4,563 net MW.  Each of these assets sells substantially all of its output pursuant to long-term offtake agreements with creditworthy counterparties. The average remaining contract duration of these offtake agreements was approximately  17 years as of  December 31, 2015 ,  based on CAFD . The Company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,315 net MWt and electric generation capacity of 124 net MW. These thermal infrastructure assets provide steam, hot water and/or chilled water, and in some instances electricity, to commercial businesses, universities, hospitals and governmental units in multiple locations, principally through long-term contracts or pursuant to rates regulated by state utility commissions.
Government Incentives
Government incentives can enhance the economics of the Company's generating assets or investments by providing, for example, loan guarantees, cash grants, favorable tax treatment, favorable depreciation rules, or other incentives.  Certain changes in law enhance federal incentives for renewable generation — including through the extensions of the wind power PTC and the solar power ITC — and could incentivize the development of additional renewable energy projects that would fit within the Company’s asset portfolio.  In addition, direct cash incentives may encourage additional renewable energy development by entities that cannot presently benefit from tax credits.

Significant Events During the Year Ended December 31, 2015 
 	 	
•	On November 3, 2015, the Company acquired 75% of the Class B interests of NRG Wind TE Holdco, or the November 2015 Drop Down Assets, which owns a portfolio of 12 wind facilities totaling 814 net MW, from NRG for total cash consideration of $209 million. In February 2016, NRG made a final working capital payment of $2 million, reducing total cash consideration to $207 million. The Company is responsible for its pro-rata share of non-recourse project debt of $193 million and noncontrolling interest associated with a tax equity structure of $159 million (as of the acquisition date).	

•	On June 30, 2015, the Company sold an economic interest in the Alta X and Alta XI wind facilities through a tax equity financing arrangement and received $119 million in net proceeds. These proceeds, as well as proceeds obtained from the Company's June 2015 equity and debt offerings discussed below, were utilized to repay all of the outstanding project indebtedness associated with the Alta X and Alta XI wind facilities.	
 	 	
•	On June 29, 2015, the Company issued 28,198,000 shares of Class C common stock for net proceeds, after underwriting discounts and expenses, of $599 million. The Company utilized the proceeds of the offering to acquire 28,198,000 additional Class C units of NRG Yield LLC and, as a result, it currently owns 53.3% of the economic interests of NRG Yield LLC, with NRG retaining 46.7% of the economic interests of NRG Yield LLC. Additionally, on June 29, 2015, the Company completed an offering of $287.5 million aggregate principal amount of 3.25% Convertible Notes due 2020, which proceeds were subsequently lent to NRG Yield LLC.	

•	On June 29, 2015, the Company acquired 25% of the membership interest in Desert Sunlight Investment Holdings, LLC, which owns two solar photovoltaic facilities totaling 550 MW, located in Desert Center, California, from EFS Desert Sun, LLC, a subsidiary of GE Energy Financial Services, for a purchase price of $285 million, utilizing a portion of the proceeds from the Class C common stock issuance. The Company's pro-rata share of non-recourse project level debt was $272 million as of December 31, 2015.	

•	Effective May 14, 2015, the Company amended its certificate of incorporation to create two new classes of capital stock, Class C common stock and Class D common stock, and distributed shares of the Class C common stock and Class D common stock to holders of the Company's outstanding Class A common stock and Class B common stock, respectively, through a stock split, which is referred to as the Recapitalization. The Recapitalization enhances the Company’s ability to focus on growth opportunities without the constraints of NRG’s capital allocation to the Company, while maintaining the Company’s relationship with NRG. The Recapitalization preserves NRG’s management and operational expertise,	

2

asset development and acquisition track record, financing experience and provides flexibility for the Company to raise capital to fund its growth.

The Class C common stock and Class D common stock have the same rights and privileges and rank equally, share ratably and are identical in all respects to the shares of Class A common stock and Class B common stock, respectively, as to all matters, except that each share of Class C common stock and Class D common stock is entitled to 1/100th of a vote on all stockholder matters.

In connection with the Recapitalization, the ROFO Agreement was amended to make additional assets available to the Company should NRG choose to sell them, including (i) two natural gas facilities totaling 795 MW of net capacity that are expected to reach COD in 2017 and 2020, (ii) an equity interest in a wind portfolio that includes wind facilities totaling approximately 934 MW of net capacity, the majority of which was sold to the Company on November 3, 2015, and (iii) up to $250 million of equity interests in one or more residential or distributed solar generation portfolios developed by affiliates of NRG.
 	 	
•	On May 8, 2015, the Company and NRG entered into a partnership by forming NRG DGPV Holdco 1 LLC, or DGPV Holdco 1, the purpose of which is to own or purchase solar power generation projects and other ancillary related assets from NRG Renew DG Holdings LLC, via intermediate funds, including: (i) a tax equity-financed portfolio of 10 recently completed community solar projects representing approximately 8 MW with a weighted average remaining PPA term of 20 years; and (ii) a tax equity-financed portfolio of approximately 12 commercial photovoltaic systems representing approximately 37 MW with a weighted average remaining PPA term of 19 years. Under this partnership, the Company committed to fund up to $100 million of capital.  On February 29, 2016, the Company and NRG entered into an additional partnership by forming NRG DGPV Holdco 2 LLC, or DGPV Holdco 2, to own or purchase solar power generation projects and other ancillary related assets from NRG Renew LLC or its subsidiaries, via intermediate funds.  Under this partnership, the Company committed to fund up to $50 million of capital. 	
 	 	
•	On May 7, 2015, the Company acquired a 90.1% interest in Spring Canyon II, a 32 MW wind facility, and Spring Canyon III, a 28 MW wind facility, each located in Logan County, Colorado, from Invenergy Wind Global LLC. The purchase price was funded with cash on hand. Power generated by Spring Canyon II and Spring Canyon III is sold to Platte River Power Authority under long-term PPAs with approximately 24 years of remaining contract life.	
 	 	
•	On April 30, 2015, the Company completed the acquisition of the University of Bridgeport Fuel Cell project in Bridgeport, Connecticut from FuelCell Energy, Inc. The project added an additional 1.4 MW of thermal capacity with a 12-year contract, with the option for a 7-year extension.	
 	 	
•	On April 9, 2015, the Company and NRG entered into a partnership by forming RPV Holdco, to invest in and hold operating portfolios of residential solar assets developed by NRG Home Solar, a subsidiary of NRG, including: (i) an existing, unlevered portfolio of over 2,200 leases across nine states representing approximately 17 MW with a weighted average remaining lease term of approximately 17 years, in which the Company invested $26 million in April 2015; and (ii) a tax equity financed portfolio of approximately 5,700 leases representing approximately 40 MW, with an average lease term for the existing and new leases of approximately 17 to 20 years, in which the Company invested $36 million of its $150 million commitment through December 31, 2015. On February 29, 2016, the Company and NRG amended the RPV Holdco partnership to reduce the aggregate commitment of $150 million to $100 million in connection with the formation of DGPV Holdco 2 discussed above. 	
 	 	
•	On January 2, 2015, the Company acquired the following projects from NRG: (i) Laredo Ridge, an 80 MW wind facility located in Petersburg, Nebraska, (ii) Tapestry, which includes Buffalo Bear, a 19 MW wind facility in Buffalo, Oklahoma; Taloga, a 130 MW wind facility in Putnam, Oklahoma; and Pinnacle, a 55 MW wind facility in Keyser, West Virginia, and (iii)  Walnut Creek, a 485 MW natural gas facility located in City of Industry, California, for total cash consideration of $489 million, including $9 million for working capital, plus assumed project-level debt of $737 million. The Company funded the acquisition with cash on hand and drawings under its revolving credit facility.	
 	 	
•	In January 2015, El Segundo experienced a steam turbine water intrusion resulting in a forced outage on Units 5 and 6.  The units returned to service in April 2015.  The Company completed a root cause analysis and has implemented steps to prevent a recurrence of the event. The Company reviewed the financial impact of repair costs and lost capacity revenue and collected approximately $4 million of insurance proceeds in the fourth quarter of 2015.	

3

Significant Events During the Year Ended December 31, 2014 
 	 	
•	On August 12, 2014, the Company acquired 100% of the membership interests of Alta Wind Asset Management Holdings, LLC, Alta Wind Company, LLC, Alta Wind X Holding Company, LLC and Alta Wind XI Holding Company, LLC, which collectively own seven wind facilities that total 947 MW located in Tehachapi, California, and a portfolio of associated land leases, or the Alta Wind Portfolio. The purchase price for the Alta Wind Portfolio was $923 million, which included a base purchase price of $870 million, and a payment for working capital of $53 million, plus the assumption of $1.6 billion of non-recourse project-level debt. In order to fund the purchase price, the Company completed an equity offering of 12,075,000 shares of its Class A common stock on July 29, 2014, which resulted in net proceeds of $630 million, after underwriting discounts and expenses, that were utilized to acquire additional Class A units in NRG Yield LLC. In addition, on August 5, 2014, NRG Yield Operating LLC, or Yield Operating, the holder of the project assets that belong to Yield LLC, issued $500 million of Senior Notes, as described in Item 15 — Note 9,  Long-term Debt , to the Consolidated Financial Statements .	
 	 	
•	On June 30, 2014, the Company acquired from NRG: (i) El Segundo, a 550 MW fast-start, gas-fired facility located in Los Angeles County, California; (ii) TA High Desert, a 20 MW solar facility located in Los Angeles County, California; and (iii) Kansas South, a 20 MW solar facility located in Kings County, California. The assets were acquired pursuant to the ROFO Agreement. The Company paid NRG total cash consideration of $357 million, which represents a base purchase price of $349 million and a payment for working capital of $8 million. In addition, the acquisition included the assumption of $612 million in project-level debt.	
 	 	
•	During the first quarter of 2014, the Company issued $345 million in aggregate principal amount of its convertible notes as described in Item 15 — Note 9,  Long-term Debt , to the Consolidated Financial Statements.	
Significant Events During the Year Ended December 31, 2013 
 	 	
•	On December 31, 2013, NRG Energy Center Omaha Holdings, LLC, an indirect wholly owned subsidiary of NRG Yield LLC, acquired Energy Systems Company, or Energy Systems, an operator of steam and chilled thermal facilities that provides heating and cooling services to nonresidential customers in Omaha, Nebraska.  See Item 15  —  Note 3, Business Acquisitions , to the Consolidated Financial Statements for information related to the acquisition.	
 	 	
•	During 2013, Alpine, Avra, Borrego, CVSR, El Segundo, Marsh Landing, Kansas South, and TA High Desert achieved COD. In addition, Borrego completed financing arrangements with a group of lenders. See Item 15  — Note 9 , Long-term Debt , to the Consolidated Financial Statements for information related to these financing activities.	
 	 	
•	The Company completed its initial public offering of its Class A common stock on July 22, 2013. See Item 15 — Note 1,  Nature of Business , to the Consolidated Financial Statements for information related to the initial public offering.	
Environmental Matters and Regulatory Matters
Details of environmental matters and regulatory matters are presented in Item 1 — Business, Regulatory Matters and Item 1A—  Risk Factors . Details of some of this information relate to costs that may impact the Company's financial results.
Trends Affecting Results of Operations and Future Business Performance
Wind and Solar Resource Availability
Wind and solar resource availability can affect the Company's results. The Company's results were impacted by lower than normal wind resource availability in 2015. While the Company's wind facilities were available, adverse weather had a negative impact on wind resources. The Company cannot predict wind and solar resource availability and their related impacts on future results.
CapitalMarket Conditions
The Company and its peer group have recently experienced difficult conditions in the capital markets. The Company’s growth strategy depends on its ability to identify and acquire additional conventional and renewable facilities from NRG and unaffiliated third parties.  A prolonged disruption in the equity capital market conditions could make it difficult for the Company to successfully acquire attractive projects from NRG or third parties and may also limit the Company’s ability to obtain debt or equity financing to complete such acquisitions.  If the Company is unable to raise adequate proceeds when needed to fund such acquisitions, the ability to grow its project portfolio may be limited, which could have a material adverse effect on the Company’s ability to implement its growth strategy. A full description of the risks applicable to the Company's business is presented in Item 1A,  Risk Factors .

4

Consolidated Results of Operations
2015 compared to 2014 
The following table provides selected financial information:

 	Year ended December 31,	
(In millions, except otherwise noted)	2015	 	2014	 	Change %	
Operating Revenues	 	 	 	 	 	
Energy and capacity revenues	$	1,009	
 	 	$	855	
 	 	18	
 	
Contract amortization	(54	)	 	(29	)	 	86	
 	
Mark-to-market economic hedging activities	(2	)	 	2	
 	 	(200	)	
Total operating revenues	953	
 	 	828	
 	 	15	
 	
Operating Costs and Expenses	 	 	 	 	 	
Cost of fuels	71	
 	 	89	
 	 	(20	)	
Operations and maintenance	178	
 	 	140	
 	 	27	
 	
Other cost of operations	72	
 	 	48	
 	 	50	
 	
Depreciation and amortization	297	
 	 	233	
 	 	27	
 	
General and administrative	12	
 	 	8	
 	 	50	
 	
Acquisition-related transaction and integration costs	3	
 	 	4	
 	 	(25	)	
Total operating costs and expenses	633	
 	 	522	
 	 	21	
 	
Operating Income	320	
 	 	306	
 	 	5	
 	
Other Income (Expense)	 	 	 	 	
 	
Equity in earnings of unconsolidated affiliates	26	
 	 	17	
 	 	53	
 	
Other income, net	3	
 	 	6	
 	 	(50	)	
Loss on extinguishment of debt	(9	)	 	(1	)	 	NM	
 	
Interest expense	(263	)	 	(216	)	 	22	
 	
Total other expense, net	(243	)	 	(194	)	 	25	
 	
Income Before Income Taxes	77	
 	 	112	
 	 	(31	)	
Income tax expense	12	
 	 	4	
 	 	200	
 	
Net Income	65	
 	 	108	
 	 	(40	)	
Less: Pre-acquisition net (loss) income of Drop Down Assets	(10	)	 	44	
 	 	(123	)	
Net Income Excluding Pre-acquisition Net (Loss) Income of Drop Down Assets	75	
 	 	64	
 	 	17	
 	
Less: Net income attributable to noncontrolling interests	42	
 	 	48	
 	 	(13	)	
Net Income Attributable to NRG Yield, Inc.	$	33	
 	 	$	16	
 	 	106	

 	
 	 	 	 	 	 	
 	Year ended December 31,	
Business metrics:	2015	 	2014	
Renewable MWh sold (in thousands) (a)	6,412	
 	 	4,659	
 	
Thermal MWt sold (in thousands)	1,946	
 	 	2,060	
 	
Thermal MWh sold (in thousands)	297	
 	 	205	

 	

(a)Volumes sold do not include the MWh generated by the Company's equity method investments.
NM - Not meaningful.

5

Management’s discussion of the results of operations for the years ended December 31, 2015, and 2014
As described in Item 15 — Note 3, Business Acquisitions, the Company completed the following acquisitions from NRG during the year ended December 31, 2015:
 	 	
•	On November 3, 2015, the Company acquired 75% of the Class B interests of NRG Wind TE Holdco, or the November 2015 Drop Down Assets, which owns a portfolio of 12 wind facilities totaling 814 net MW, from NRG for total cash consideration of $209 million. In February 2016, NRG made a final working capital payment of $2 million, reducing total cash consideration to $207 million.	
 	 	
•	On January 2, 2015, the Company acquired the Laredo Ridge, Tapestry, and Walnut Creek projects, or the January 2015 Drop Down Assets, for total cash consideration of $489 million, plus assumed project-level debt of $737 million.	
The January 2015 Drop Down Assets and the November 2015 Drop Down Assets (other than Elbow Creek) were originally acquired by NRG from EME on April 1, 2014, and are collectively referred to as "EME Assets" throughout this discussion. The Company prepared its consolidated financial statements for the periods ending December 31, 2015, and 2014, to reflect the acquisitions as if they had taken place from the date the entities were under common control, which was April 1, 2014 for the EME Assets. Accordingly, the results presented herein reflect the Company's ownership of the EME Assets for the full year ended December 31, 2015, compared to the nine months from April 1, 2014, through December 31, 2014.
Gross Margin and Economic Gross Margin
In addition to gross margin, the Company evaluates its operating performance using the measure of economic gross margin, which is not a GAAP measure and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.  Economic gross margin should be viewed as a supplement to and not a substitute for the Company' presentation of gross margin, which is the most directly comparable GAAP measure.  Economic gross margin is not intended to represent gross margin. The Company believes that economic gross margin is useful to investors as it is a key operational measure reviewed by the Company's chief operating decision maker. Economic gross margin is defined as energy and capacity revenue less cost of fuels. Economic gross margin excludes the following components from GAAP gross margin: contract amortization, mark-to-market results, emissions credit amortization and (losses) gains on economic hedging activities. Mark-to-market results consist of unrealized gains and losses on contracts that are not yet settled.
The below tables present the composition of gross margin, as well as the reconciliation to economic gross margin, for the years ended December 31, 2015 and 2014:

6

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Conventional	 	Renewables	 	Thermal	 	Total	
(In millions)	 	
Year ended December 31, 2015	 	 	 	 	 	 	 	
Energy and capacity revenues	$	341	
 	 	$	492	
 	 	$	176	
 	 	$	1,009	
 	
Cost of fuels	(1	)	 	(1	)	 	(69	)	 	(71	)	
Contract amortization	(5	)	 	(47	)	 	(2	)	 	(54	)	
Mark-to-market for economic hedging activities	—	
 	 	(2	)	 	—	
 	 	(2	)	
Gross margin	$	335	
 	 	$	442	
 	 	$	105	
 	 	$	882	
 	
Contract amortization	5	
 	 	47	
 	 	2	
 	 	54	
 	
Mark-to-market for economic hedging activities	—	
 	 	2	
 	 	—	
 	 	2	
 	
Economic gross margin	$	340	
 	 	$	491	
 	 	$	107	
 	 	$	938	

Year ended December 31, 2014	 	 	 	 	 	 	 	
Energy and capacity revenues	$	321	
 	 	$	337	
 	 	$	197	
 	 	$	855	
 	
Cost of fuels	(2	)	 	(1	)	 	(86	)	 	(89	)	
Contract amortization	(4	)	 	(23	)	 	(2	)	 	(29	)	
Mark-to-market for economic hedging activities	—	
 	 	2	
 	 	—	
 	 	2	
 	
Gross margin	$	315	
 	 	$	315	
 	 	$	109	
 	 	$	739	
 	
Contract amortization	4	
 	 	23	
 	 	2	
 	 	29	
 	
Mark-to-market for economic hedging activities	—	
 	 	(2	)	 	—	
 	 	(2	)	
Economic gross margin	$	319	
 	 	$	336	
 	 	$	111	
 	 	$	766	
 	
Gross margin increased by $143 million and economic gross marginincreased by $172 million during the year ended December 31, 2015, compared to the same period in 2014, driven by:

Renewable:	 	
Acquisitions of the Alta Wind Portfolio in August 2014 and Spring Canyon in May 2015	$	126	
 	
Acquisition of EME Assets (Wind)	31	
 	
Other	(2	)	
Conventional:	 	
Acquisition of EME Assets (Walnut Creek)	25	
 	
Decrease due to the forced outage at El Segundo in the first half of 2015	(4	)	
Thermal:	 	
Decrease due to milder weather conditions in 2015 compared to 2014	(4	)	
Increase in economic gross margin	$	172	
 	
Higher contract amortization primarily due to the amortization of the PPAs acquired in the acquisition of the Alta Wind Portfolio in August 2014	(25	)	
Losses from mark-to-market for economic hedging activities	(4	)	
Increase in gross margin	$	143	
 	
Mark-to-market for economic hedging activities
Mark-to-market results for the years ended December 31, 2015, and 2014 represent the unrealized losses and gains, respectively, on forward contracts with an NRG subsidiary hedging the sale of power from the Elbow Creek wind facility extending through the end of 2015, as further described in Item 15 — Note 7 , Accounting for Derivative Instruments and Hedging Activities , to the Consolidated Financial Statements .

7

Operations and Maintenance Expense

 	Conventional	 	Renewables	 	Thermal	 	Total	
(In millions)	 	
Year ended December 31, 2015	$	30	
 	 	$	97	
 	 	$	51	
 	 	$	178	
 	
Year ended December 31, 2014	30	
 	 	63	
 	 	47	
 	 	140	
 	
Operations and maintenance expense increased by $38 million during the year ended December 31, 2015, compared to the same period in 2014, driven by:

Acquisition of Alta Wind Portfolio in August 2014 and Spring Canyon in May 2015	$	21	
 	
Acquisition of EME Assets, primarily in the Renewable segment	16	
 	
Other	1	
 	
 	$	38	
 	
Other Costs of Operations
Other costs of operations increased by $24 million during the year ended December 31, 2015, compared to the same period in 2014, due primarily to an increase in property taxes resulting from the acquisitions of the Alta Wind Portfolio in August 2014 and the EME Assets in April 2014.
Depreciation and Amortization
Depreciation and amortization increased by $64 million during the year ended December 31, 2015, compared to the same period in 2014, due primarily to the acquisitions of the Alta Wind Portfolio in August 2014 and the EME Assets in April 2014.
Equity in Earnings of Unconsolidated Affiliates
Equity in earnings of unconsolidated affiliates increased by $9 million during the year ended December 31, 2015, compared to the same period in 2014, due primarily to the acquisition of Desert Sunlight in June 2015 as well as the Elkhorn Ridge and San Juan Mesa projects, acquired as part of the EME Assets.
Interest Expense     
Interest expense increased by $47 million during the year ended December 31, 2015, compared to the same period in 2014 due to:

(In millions)	 	
Acquisition of Alta Wind Portfolio in August 2014	$	32	
 	
Issuance of the Senior Notes due 2024 in the third quarter of 2014, 2020 Convertible Notes in the second quarter of 2015, and the 2019 Convertible Notes in the first quarter of 2014	31	
 	
Acquisition of EME Assets in April 2014	3	
 	
Repricing of project-level financing arrangements and principal repayments	(9	)	
Changes in the fair value of interest rate swaps	(10	)	
 	$	47	

8

Income Tax Expense
For the year ended December 31, 2015, the Company recorded income tax expense of $12 million on pretax income of $77 million. For the same period in 2014, the Company recorded income tax expense of $4 million on pretax income of $112 million. For the years ended December 31, 2015, and 2014 the overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and PTCs derived from certain wind generation facilities.
Income Attributable to Noncontrolling Interests
For the year ended December 31, 2015, the Company had income of $56 million attributable to NRG's interest in the Company and a loss of $14 million attributable to noncontrolling interests with respect to its tax equity financing arrangements and the application of the HLBV method. For the year ended December 31, 2014, the Company had income of $48 million attributable to NRG's interest in the Company.

9

Consolidated Results of Operations
2014 compared to 2013 
The following table provides selected financial information:

 	Year ended December 31,	
(In millions, except otherwise noted)	2014	 	2013	 	Change %	
Operating Revenues	 	 	 	 	 	
Energy and capacity revenues	$	855	
 	 	$	435	
 	 	97	
 	
Contract amortization	(29	)	 	(1	)	 	N/M	
 	
Mark-to-market economic hedging activities	2	
 	 	—	
 	 	100	
 	
Total operating revenues	828	
 	 	434	
 	 	91	
 	
Operating Costs and Expenses	 	 	 	 	 	
Cost of fuels	89	
 	 	68	
 	 	31	
 	
Operations and maintenance	140	
 	 	71	
 	 	97	
 	
Other cost of operations	48	
 	 	15	
 	 	220	
 	
Depreciation and amortization	233	
 	 	92	
 	 	153	
 	
General and administrative — affiliate	8	
 	 	7	
 	 	14	
 	
Acquisition-related transaction and integration costs	4	
 	 	—	
 	 	100	
 	
Total operating costs and expenses	522	
 	 	253	
 	 	106	
 	
Operating Income	306	
 	 	181	
 	 	69	
 	
Other Income (Expense)	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	17	
 	 	20	
 	 	(15	)	
Other income, net	6	
 	 	4	
 	 	50	
 	
Loss on extinguishment of debt	(1	)	 	—	
 	 	100	
 	
Interest expense	(216	)	 	(72	)	 	200	
 	
Total other expense, net	(194	)	 	(48	)	 	304	
 	
Income Before Income Taxes	112	
 	 	133	
 	 	(16	)	
Income tax expense	4	
 	 	8	
 	 	(50	)	
Net Income	108	
 	 	125	
 	 	(14	)	
Less: Pre-acquisition net income of Drop Down Assets	44	
 	 	16	
 	 	175	
 	
Net Income Excluding Pre-acquisition Net Income of Drop Down Assets	64	
 	 	109	
 	 	(41	)	
Less: Predecessor income prior to initial public offering on July 22, 2013	—	
 	 	54	
 	 	(100	)	
Less: Net income attributable to noncontrolling interests	48	
 	 	42	
 	 	14	
 	
Net Income Attributable to NRG Yield, Inc.	$	16	
 	 	$	13	
 	 	23	

 	
 	 	 	 	 	 	
 	Year ended December 31,	
Business metrics:	2014	 	2013	
Renewable MWh sold (in thousands) (a)	4,659	
 	 	1,625	
 	
Thermal MWt sold (in thousands)	2,060	
 	 	1,679	
 	
Thermal MWh sold (in thousands)	205	
 	 	139	

 	

(a)Volumes sold do not include the MWh generated by the Company's equity method investments.
N/M - Not meaningful.

10

Management’s discussion of the results of operations for the years ended December 31, 2014, and 2013
Gross Margin and Economic Gross Margin
In addition to gross margin, the Company evaluates its operating performance using the measure of economic gross margin, which is not a GAAP measure and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.  Economic gross margin should be viewed as a supplement to and not a substitute for the Company' presentation of gross margin, which is the most directly comparable GAAP measure.  Economic gross margin is not intended to represent gross margin. The Company believes that economic gross margin is useful to investors as it is a key operational measure reviewed by the Company's chief operating decision maker. Economic gross margin is defined as energy and capacity revenue less cost of fuels. Economic gross margin excludes the following components from GAAP gross margin: contract amortization, mark-to-market gains, emissions credit amortization and (losses) gains on economic hedging activities. Mark-to-market results consist of unrealized gains and losses on contracts that are not yet settled.

The below tables present the composition of gross margin, as well as the reconciliation to economic gross margin, for the years ended December 31, 2014 and 2013:

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Conventional	 	Renewables	 	Thermal	 	Total	
 (In millions)	 	 	 	
Year ended December 31, 2014	 	 	 	 	 	 	
 	
Energy and capacity revenues	$	321	
 	 	$	337	
 	 	$	197	
 	 	$	855	
 	
Cost of fuels	(2	)	 	(1	)	 	(86	)	 	(89	)	
Contract amortization	(4	)	 	(23	)	 	(2	)	 	(29	)	
Mark-to-market for economic hedging activities	—	
 	 	2	
 	 	—	
 	 	2	
 	
Gross margin	$	315	
 	 	$	315	
 	 	$	109	
 	 	$	739	
 	
Contract amortization	4	
 	 	23	
 	 	2	
 	 	29	
 	
Mark-to-market for economic hedging activities	—	
 	 	(2	)	 	—	
 	 	(2	)	
Economic gross margin	$	319	
 	 	$	336	
 	 	$	111	
 	 	$	766	

Year ended December 31, 2013	 	 	 	 	 	 	 	
Energy and capacity revenues	$	138	
 	 	$	144	
 	 	$	153	
 	 	$	435	
 	
Cost of fuels	(5	)	 	—	
 	 	(63	)	 	(68	)	
Contract amortization	—	
 	 	—	
 	 	(1	)	 	(1	)	
Gross margin	$	133	
 	 	$	144	
 	 	$	89	
 	 	366	
 	
Contract amortization	—	
 	 	—	
 	 	1	
 	 	1	
 	
Economic gross margin	$	133	
 	 	$	144	
 	 	$	90	
 	 	$	367	
 	
Gross margin increased by $373 million and economic gross margin increased by $399 million during the year ended December 31, 2014, compared to the same period in 2013, driven by:

11

 	
 	 	 	 	
Conventional:	 	
Marsh Landing and El Segundo reaching commercial operations in 2013	$	109	
 	
Acquisition of EME Assets (Walnut Creek)	77	
 	
Renewable:	 	
Acquisition of EME Assets (Wind)	85	
 	
Acquisition of Alta Wind Portfolio in August 2014	64	
 	
Kansas South, TA High Desert, Borrego and CVSR facilities reaching commercial operations in 2013	41	
 	
Other	2	
 	
Thermal:	 	
Acquisition of Energy Systems in December 2013	15	
 	
Repowering of Dover facilities in the second quarter of 2013, and increased generation at other Thermal facilities due to weather conditions in the first quarter of 2014	6	
 	
Increase in economic gross margin	$	399	
 	
Higher contract amortization due to the amortization of the PPAs acquired in the acquisitions of the Alta Wind Portfolio in August 2014 and the EME Assets in April 2014	(28	)	
Gain in mark-to-market for economic hedging activities	2	
 	
Increase in gross margin	$	373	
 	
Mark-to-market for economic hedging activities
Mark-to-market results for the year ended December 31, 2014, represent the unrealized gains on forward contracts with an NRG subsidiary hedging the sale of power from the Elbow Creek wind facility extending through the end of 2015, as further described in Item 15 — Note 7 , Accounting for Derivative Instruments and Hedging Activities , to the Consolidated Financial Statements.
Operations and Maintenance Expense

 	Conventional	 	Renewables	 	Thermal	 	Total	
 (In millions)	 	 	 	
Year ended December 31, 2014	$	30	
 	 	$	63	
 	 	$	47	
 	 	$	140	
 	
Year ended December 31, 2013	11	
 	 	19	
 	 	41	
 	 	71	
 	
Operations and maintenance expense increased by $69 million during the year ended December 31, 2014, compared to the same period in 2013, driven by:

Conventional:	 	
Marsh Landing and El Segundo reaching commercial operations in 2013	$	13	
 	
Acquisition of EME Assets (Walnut Creek)	6	
 	
Renewable:	 	
Acquisition of EME Assets (Wind)	27	
 	
Acquisition of Alta Wind Portfolio in August 2014	11	
 	
Kansas South, TA High Desert, Borrego and CVSR facilities reaching commercial operations in 2013	6	
 	
Thermal:	 	
Acquisition of Energy Systems in December 2013	6	
 	
 	$	69	
 	
Other Costs of Operations
Other costs of operations increased by $33 million during the year ended December 31, 2014, compared to the same period in 2013, primarily due to an increase in property taxes resulting from the acquisitions of the EME Assets in April 2014 and the Alta Wind Portfolio in August 2014, as well as Marsh Landing and El Segundo reaching commercial operations in 2013.
Depreciation and Amortization
Depreciation and amortization increased by $141 million during the year ended December 31, 2014, compared to the same period in 2013, due to:

12

 	
 	 	 	 	
(In millions)	 	
Acquisition of the EME Assets	$	54	
 	
Marsh Landing and El Segundo, which reached commercial operations in 2013	45	
 	
Acquisition of Alta Wind Portfolio in August 2014	23	
 	
Acquisition of Energy Systems in December 2013	4	
 	
Kansas South, TA High Desert and Borrego facilities reached commercial operations in 2013	2	
 	
CVSR reached commercial operations in 2013	13	
 	
 	$	141	
 	
Equity in Earnings of Unconsolidated Affiliates
Equity in earnings of unconsolidated affiliates decreased by $3 million during the year ended December 31, 2014, compared to the same period in 2013, due primarily to losses from San Juan Mesa, acquired with the EME Assets.
Interest Expense     
Interest expense increased by $144 million during the year ended December 31, 2014, compared to the same period in 2013, due to:

(In millions)	 	
Interest expense on the project-level debt assumed in the Alta Wind Portfolio acquisition in August 2014	$	45	
 	
Issuance of Senior Notes due 2024 in August 2014, Convertible Notes due 2019 in March 2014 and, to a lesser extent, increased interest expense on the Company's revolving credit facility	30	
 	
Increase due to the acquisition of the EME Assets in April 2014	25	
 	
Increase in interest expense primarily related to Alpine interest rate swap	21	
 	
Increase in interest expense for the El Segundo and Marsh Landing projects which reached commercial operations in 2013	18	
 	
Increase due to CVSR which reached commercial operations in 2013	5	
 	
 	$	144	
 	
Income Tax Expense
For the year ended December 31, 2014, the Company recorded income tax expense of $4 million on pretax income of $112 million. For the same period in 2013, the Company recorded income tax expense of $8 million on pretax income of $133 million. For the year ended December 31, 2014, the Company's overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and PTCs generated from certain wind generation facilities. For the year ended December 31, 2013, the Company's overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC.
Income Attributable to Noncontrolling Interests
For the twelve months ended December 31, 2014 and 2013, the Company had income of $48 million and $42 million, respectively, attributable to NRG's interest in the Company.

13

Liquidity and Capital Resources
The Company's principal liquidity requirements are to meet its financial commitments, finance current operations, fund capital expenditures, including acquisitions from time to time, to service debt and to pay dividends. Historically, the Company's predecessor operations were financed as part of NRG's integrated operations and largely relied on internally generated cash flows as well as corporate and/or project-level borrowings to satisfy its capital expenditure requirements.  As a normal part of the Company's business, depending on market conditions, the Company will from time to time consider opportunities to repay, redeem, repurchase or refinance its indebtedness. Changes in the Company's operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause the Company to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions.
Liquidity Position
As of December 31, 2015, and December 31, 2014, the Company's liquidity was approximately $375 million and $971 million, respectively, comprised of cash, restricted cash, and availability under the Company's revolving credit facility. The decrease primarily relates to increased borrowings under the revolving credit facility used to fund the acquisition of the November 2015 Drop Down Assets and the use of cash on hand to fund the acquisition of the January 2015 Drop Down Assets. The Company's various financing arrangements are described in Item 15  — Note 9 ,  Long-term Debt , to the Consolidated Financial Statements .   On June 26, 2015, the Company amended the revolving credit facility to, among other things, increase the availability from $450 million to $495 million. As of December 31, 2015, $306 million of borrowings and $56 million of letters of credit were outstanding.
Management believes that the Company's liquidity position, cash flows from operations and availability under its revolving credit facility will be adequate to meet the Company's financial commitments; debt service obligations; growth, operating and maintenance capital expenditures; and to fund dividends to holders of the Company's Class A common stock and Class C common stock. Management continues to regularly monitor the Company's ability to finance the needs of its operating, financing and investing activity within the dictates of prudent balance sheet management.
Credit Ratings
Credit rating agencies rate a firm's public debt securities. These ratings are utilized by the debt markets in evaluating a firm's credit risk. Ratings influence the price paid to issue new debt securities by indicating to the market the Company's ability to pay principal, interest and preferred dividends. Rating agencies evaluate a firm's industry, cash flow, leverage, liquidity, and hedge profile, among other factors, in their credit analysis of a firm's credit risk.
The following table summarizes the credit ratings for the Company and its Senior Notes as of December 31, 2015:

 	S&P	 	Moody's	
NRG Yield, Inc. 	BB+	 	Ba2	
5.375% Senior Notes, due 2024	BB+	 	Ba2	
On August 15, 2016, S&P lowered its corporate credit ratings on NRG Yield, Inc. and the Senior Notes due 2024 to BB from BB+. The rating outlook is stable.
Sources of Liquidity
The Company's principal sources of liquidity include cash on hand, cash generated from operations, borrowings under new and existing financing arrangements and the issuance of additional equity and debt securities as appropriate given market conditions. As described in Item 15  — Note 9 ,  Long-term Debt , to the Consolidated Financial Statements, and above in Significant Events During the Year Ended December 31, 2015,  and  Significant Events During the Year Ended December 31, 2014 , the Company's financing arrangements consist of the revolving credit facility, the 2019 Convertible Notes, the 2020 Convertible Notes, the Senior Notes and project-level financings for its various assets.
Recapitalization
As described above in Significant Events During the Year Ended December 31, 2015, effective May 14, 2015, NRG Yield, Inc. amended its certificate of incorporation to create two new classes of capital stock, Class C common stock and Class D common stock, and distributed shares of the Class C common stock and Class D common stock to holders of the Company's outstanding Class A common stock and Class B common stock, respectively, through a stock split.
The par value per share of the Company’s Class A common stock and Class B common stock remains unchanged at $0.01 per share after the effect of the stock split. Accordingly, the stock split was accounted for as a stock dividend. The Company recorded a transfer between retained earnings and common stock equal to the par value of each share of Class C common stock

14

and Class D common stock that was issued. The Company also gave retroactive effect to prior period share and per share amounts in the Consolidated Financial Statements for the effect of the stock dividend, such that all periods are comparable.
In connection with the amendment described above, the ROFO Agreement was amended to make additional assets available to the Company should NRG choose to sell them, including (i) two natural gas facilities totaling 795 MW of net capacity that are expected to reach COD in 2017 and 2020, (ii) an equity interest in a wind portfolio that includes wind facilities totaling approximately 934 MW of net capacity, the majority of which was sold to the Company on November 3, 2015, and (iii) up to $250 million of equity interests in one or more residential or distributed solar generation portfolios developed by affiliates of NRG.
On June 29, 2015, NRG Yield, Inc. issued 28,198,000 shares of Class C common stock for net proceeds of $599 million, net of underwriting discounts and commissions of $21 million. The Company utilized the proceeds of the offering to acquire 28,198,000 additional Class C units of NRG Yield LLC and, as a result, it currently owns 53.3% of the economic interests of NRG Yield LLC, with NRG retaining 46.7% of the economic interests of NRG Yield LLC. Additionally, on June 29, 2015, the Company completed an offering of $287.5 million aggregate principal amount of 3.25% Convertible Notes due 2020, which proceeds were subsequently lent to NRG Yield LLC.

Uses of Liquidity
The Company's requirements for liquidity and capital resources, other than for operating its facilities, are categorized as: (i) debt service obligations, as described more fully in Item 15  — Note 9 ,  Long-term Debt , to the Consolidated Financial Statements; (ii) capital expenditures; (iii) acquisitions and investments; and (iv) cash dividends to investors.

15

Debt Service Obligations
Principal payments on debt as of December 31, 2015, are due in the following periods:

Description	2016	 	2017	 	2018	 	2019	 	2020	 	There-after	 	Total	
 	(In millions)	
NRG Yield, Inc. Convertible Notes, due 2019	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	345	
 	 	$	—	
 	 	$	—	
 	 	$	345	
 	
NRG Yield, Inc. Convertible Notes, due 2020	—	
 	 	—	
 	 	—	
 	 	—	
 	 	287	
 	 	—	
 	 	287	
 	
NRG Yield Operating LLC Senior Notes, due 2024	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	500	
 	 	500	
 	
NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility, due 2019	—	
 	 	—	
 	 	—	
 	 	306	
 	 	—	
 	 	—	
 	 	306	
 	
   Total Corporate-level debt	—	
 	 	—	
 	 	—	
 	 	651	
 	 	287	
 	 	500	
 	 	1,438	
 	
Project-level debt:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Alta Wind I, lease financing arrangement, due 2034	10	
 	 	11	
 	 	11	
 	 	12	
 	 	12	
 	 	196	
 	 	252	
 	
Alta Wind II, lease financing arrangement, due 2034	7	
 	 	8	
 	 	8	
 	 	8	
 	 	9	
 	 	158	
 	 	198	
 	
Alta Wind III, lease financing arrangement, due 2034	7	
 	 	8	
 	 	8	
 	 	8	
 	 	9	
 	 	166	
 	 	206	
 	
Alta Wind IV, lease financing arrangement, due 2034	5	
 	 	5	
 	 	5	
 	 	5	
 	 	6	
 	 	107	
 	 	133	
 	
Alta Wind V, lease financing arrangement, due 2035	7	
 	 	8	
 	 	8	
 	 	8	
 	 	9	
 	 	173	
 	 	213	
 	
Alta Realty Investments, due 2031	1	
 	 	1	
 	 	2	
 	 	2	
 	 	1	
 	 	26	
 	 	33	
 	
Alta Wind Asset Management, due 2031	1	
 	 	1	
 	 	1	
 	 	1	
 	 	1	
 	 	14	
 	 	19	
 	
Alpine, due 2022	9	
 	 	9	
 	 	8	
 	 	8	
 	 	8	
 	 	112	
 	 	154	
 	
Avra Valley, due 2031	3	
 	 	3	
 	 	3	
 	 	3	
 	 	4	
 	 	44	
 	 	60	
 	
Blythe, due 2028	2	
 	 	2	
 	 	1	
 	 	2	
 	 	1	
 	 	13	
 	 	21	
 	
Borrego, due 2025 and 2038	3	
 	 	3	
 	 	3	
 	 	3	
 	 	3	
 	 	57	
 	 	72	
 	
CVSR, due 2037	23	
 	 	25	
 	 	26	
 	 	24	
 	 	21	
 	 	674	
 	 	793	
 	
El Segundo Energy Center, due 2023	42	
 	 	43	
 	 	48	
 	 	49	
 	 	53	
 	 	250	
 	 	485	
 	
Energy Center Minneapolis, due 2017 and 2025	12	
 	 	13	
 	 	7	
 	 	11	
 	 	11	
 	 	54	
 	 	108	
 	
Kansas South, due 2031	2	
 	 	2	
 	 	2	
 	 	2	
 	 	2	
 	 	23	
 	 	33	
 	
Laredo Ridge, due 2028	5	
 	 	5	
 	 	5	
 	 	5	
 	 	6	
 	 	78	
 	 	104	
 	
Marsh Landing, due 2017 and 2023	48	
 	 	52	
 	 	55	
 	 	57	
 	 	60	
 	 	146	
 	 	418	
 	
Other	2	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	2	
 	
PFMG and related subsidiaries financing agreement, due 2030	2	
 	 	1	
 	 	1	
 	 	2	
 	 	1	
 	 	22	
 	 	29	
 	
Roadrunner, due 2031	3	
 	 	3	
 	 	3	
 	 	3	
 	 	2	
 	 	26	
 	 	40	
 	
South Trent Wind, due 2020	5	
 	 	4	
 	 	4	
 	 	4	
 	 	45	
 	 	—	
 	 	62	
 	
TA High Desert, due 2020 and 2032	3	
 	 	3	
 	 	3	
 	 	3	
 	 	3	
 	 	37	
 	 	52	
 	
Tapestry Wind, due 2021	9	
 	 	10	
 	 	11	
 	 	11	
 	 	11	
 	 	129	
 	 	181	
 	
Viento, due 2023	11	
 	 	13	
 	 	16	
 	 	18	
 	 	16	
 	 	115	
 	 	189	
 	
Walnut Creek, due 2023	41	
 	 	43	
 	 	45	
 	 	47	
 	 	49	
 	 	126	
 	 	351	
 	
WCEP Holdings, due 2023	1	
 	 	1	
 	 	2	
 	 	4	
 	 	4	
 	 	34	
 	 	46	
 	
   Total project-level debt	264	
 	 	277	
 	 	286	
 	 	300	
 	 	347	
 	 	2,780	
 	 	4,254	
 	
Total debt	$	264	
 	 	$	277	
 	 	$	286	
 	 	$	951	
 	 	$	634	
 	 	$	3,280	
 	 	$	5,692	

16

Capital Expenditures
The Company's capital spending program is focused on maintenance capital expenditures, or costs to maintain the assets currently operating such as costs to replace or refurbish assets during routine maintenance, and growth capital expenditures or construction of new assets and completing the construction of assets where construction is in process. The Company develops annual capital spending plans based on projected requirements for maintenance and growth capital. For the years ended December 31, 2015 , 2014, and 2013, the Company used approximately $29 million, $60 million, and $782 million, respectively, to fund capital expenditures, including maintenance  capital  expenditures  of $20 million, $8 million and $8 million, respectively. Growth capital expenditures in 2014 and 2013 primarily related to the construction of the Company’s solar generating assets, Marsh Landing, El Segundo and CVSR.
In January 2015, El Segundo experienced a steam turbine water intrusion resulting in a forced outage on Units 5 and 6.  The units returned to service in April 2015. The Company completed a root cause analysis and has implemented steps to prevent a recurrence of the event. The Company reviewed the financial impact of repair costs and lost capacity revenue and collected approximately $4 million of insurance proceeds in the fourth quarter of 2015.
Acquisitions
The Company intends to acquire generation assets developed and constructed by NRG in the future, as well as generation and thermal infrastructure assets from third parties where the Company believes its knowledge of the market and operating expertise provides a competitive advantage, and to utilize such acquisitions as a means to grow its CAFD.  See  Significant Events During the Year Ended December 31, 2015 , above for a description of the acquisitions and investments that have taken place during the year ended December 31, 2015.

Cash Dividends to Investors
The Company intends to use the amount of cash that it receives from its distributions from NRG Yield LLC to pay quarterly dividends to the holders of its Class A common stock and Class C common stock. NRG Yield LLC intends to distribute to its unit holders in the form of a quarterly distribution all of the CAFD that is generated each quarter, less reserves for the prudent conduct of the business, including among others, maintenance capital expenditures to maintain the operating capacity of the assets. CAFD is defined as net income before interest expense, income taxes, depreciation and amortization, plus cash distributions from unconsolidated affiliates, less cash distributions to noncontrolling interests, maintenance capital expenditures, pro-rata EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness and changes in other assets. Dividends on t he Class A common stock and Class C common stock are subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations. The Company expects that, based on current circumstances, comparable cash dividends will continue to be paid in the foreseeable future.
The following table lists the dividends paid on the Company's Class A common stock and Class C common stock during the year ended December 31, 2015:

 	Fourth Quarter 2015	 	Third Quarter 2015	 	Second Quarter 2015	 	First Quarter 2015	
Dividends per Class A share	$	0.215	
 	 	$	0.21	
 	 	$	0.20	
 	 	$	0.39	
 	
Dividends per Class C share	$	0.215	
 	 	$	0.21	
 	 	$	0.20	
 	 	N/A	
 	
On February 17, 2016, the Company declared a quarterly dividend on its Class A and Class C common stock of $0.225 per share payable on March 15, 2016, to stockholders of record as of March 1, 2016.

17

Cash Flow Discussion
Year Ended December 31, 2015, Compared to Year Ended December 31, 2014 
The following table reflects the changes in cash flows for the year ended December 31, 2015, compared to 2014:

Year ended December 31,	2015	 	2014	 	Change	
(In millions)	 	
Net cash provided by operating activities	$	405	
 	 	$	362	
 	 	$	43	
 	
Net cash used in investing activities	(1,108	)	 	(739	)	 	(369	)	
Net cash provided by financing activities	385	
 	 	747	
 	 	(362	)	
Net Cash Provided By Operating Activities

Changes to net cash provided by operating activities were driven by:	(In millions)	
Increase in operating income adjusted for non-cash items	$	40	
 	
Higher net distributions from unconsolidated affiliates for the period ending December 31, 2015, compared to the same period in 2014	13	
 	
Changes in working capital primarily driven by timing of the capacity payments	(10	)	
 	$	43	
 	
Net Cash Used In Investing Activities

Changes to net cash used in investing activities were driven by:	(In millions)	
Payments to acquire businesses, net of cash acquired (primarily the Alta acquisition in 2014)	$	864	
 	
Higher payments made to acquire Drop Down Assets in 2015 compared to payments made in 2014	(387	)	
Decrease in capital expenditures due to several projects being placed in service in early 2014	31	
 	
Changes in restricted cash primarily due to cash transfers in connection with higher debt principal payments in 2015	(26	)	
Increase in net investments in unconsolidated affiliates in 2015, compared to 2014, primarily due to the investment in Desert Sunlight made in 2015	(364	)	
Proceeds from renewable energy grants in 2014	(422	)	
Receipt of indemnity from supplier for CVSR	(57	)	
Other	(8	)	
 	$	(369	)	
Net Cash Provided By Financing Activities

Changes in net cash provided by financing activities were driven by:	(In millions)	
Lower contributions from tax equity investors in 2015	$	(68	)	
Lower payments of dividends and returns of capital to NRG, partially offset by contributions from NRG in 2014	274	
 	
Lower net proceeds from Class C equity offering on June 29, 2015, compared to the net proceeds from Class A equity offering on July 29, 2014	(31	)	
Increase in debt payments, as well as a decrease in proceeds from long-term debt in 2015, compared to 2014	(522	)	
Increase in dividends and distributions paid	(38	)	
Decrease in debt issuance costs due to lower borrowings in 2015	23	
 	
 	$	(362	)	

18

Year Ended December 31, 2014, Compared to Year Ended December 31, 2013 
The following table reflects the changes in cash flows for the year ended December 31, 2014, compared to 2013:

Year ended December 31,	2014	 	2013	 	Change	
(In millions)	 	
Net cash provided by operating activities	$	362	
 	 	$	168	
 	 	$	194	
 	
Net cash used in investing activities	(739	)	 	(965	)	 	226	
 	
Net cash provided by financing activities	747	
 	 	834	
 	 	(87	)	
Net Cash Provided By Operating Activities

Changes to net cash provided by operating activities were driven by:	(In millions)	
Increase in operating income due to El Segundo, Marsh Landing, CVSR and a number of the Renewable projects being placed in service in 2013, as well as the acquisitions of the Alta Wind Portfolio and the EME Assets, adjusted for non-cash charges	$	140	
 	
Higher net distributions from unconsolidated affiliates for the period ending December 31, 2014, compared to the same period in 2013	8	
 	
Decreased working capital requirements due to assets placed in service in 2013	46	
 	
 	$	194	
 	
Net Cash Used In Investing Activities

Changes to net cash used in investing activities were driven by:	(In millions)	
Increase in cash paid for Alta Wind Portfolio in 2014 compared to cash paid for Energy Systems in 2013	$	(781	)	
Payment to NRG for Drop Down Assets, net of cash acquired	(311	)	
Decrease in capital expenditures for El Segundo, Marsh Landing and some Renewable projects, as the assets were placed in service in 2013	722	
 	
Decrease in restricted cash, primarily for Marsh Landing, Borrego, Alta Wind Portfolio, El Segundo, Alpine and High Desert	115	
 	
Increase in notes receivable, including affiliates	18	
 	
Increase in proceeds from renewable grants in 2014 compared to 2013	397	
 	
Decrease in investments in unconsolidated affiliates in 2014 compared to 2013	(2	)	
Receipt of indemnity from supplier for CVSR	57	
 	
Other	11	
 	
 	$	226	
 	
Net Cash Provided By Financing Activities

Changes in net cash provided by financing activities were driven by:	(In millions)	
Decrease in dividends and returns of capital to NRG, net of change in cash contributions from NRG	$	144	
 	
Contributions from tax equity investors in 2014	190	
 	
Increase in proceeds from the issuance of Class A common stock on July 29, 2014, compared to the prior year initial public offering	162	
 	
Increase in dividends paid in 2014 compared to 2013	(86	)	
Increase in debt payments, as well as a decrease in proceeds from long-term debt in 2014, compared to 2013	(462	)	
Gain on settlement of swaptions in 2013	(4	)	
Increase in cash paid for deferred financing costs	(31	)	
 	$	(87	)	

19

NOLs, Deferred Tax Assets and Uncertain Tax Position Implications, under ASC 740
As of December 31, 2015, the Company has a cumulative federal NOL carry forward balance of $519 million for financial statement purposes, which will begin expiring in 2033, and does not anticipate any federal income tax payments for 2016. As a result of the Company's tax position, and based on current forecasts, the Company does not anticipate significant income tax payments for state and local jurisdictions in 2016. Based on the Company's current and expected NOL balances generated primarily by accelerated tax depreciation of its property, plant and equipment, the Company does not expect to pay significant federal income tax for a period of approximately nine years.
The Company has no uncertain tax benefits.
Off-Balance Sheet Arrangements
Obligations under Certain Guarantee Contracts
The Company may enter into guarantee arrangements in the normal course of business to facilitate commercial transactions with third parties.
Retained or Contingent Interests
The Company does not have any material retained or contingent interests in assets transferred to an unconsolidated entity.
Obligations Arising Out of a Variable Interest in an Unconsolidated Entity
Variable interest in equity investments — As of December 31, 2015, the Company has several investments with an ownership interest percentage of 50% or less in energy and energy-related entities that are accounted for under the equity method. NRG DGPV Holdco 1 LLC ,  NRG RPV Holdco 1 LLC and GenConn are variable interest entities for which the Company is not the primary beneficiary.
The Company's pro-rata share of non-recourse debt held by unconsolidated affiliates was approximately $454 million as of December 31, 2015. This indebtedness may restrict the ability of these subsidiaries to issue dividends or distributions to the Company. See also Item 15 — Note 5,  Investments Accounted for by the Equity Method and Variable Interest Entities , to the Consolidated Financial Statements.
Contractual Obligations and Commercial Commitments
The Company has a variety of contractual obligations and other commercial commitments that represent prospective cash requirements in addition to the Company's capital expenditure programs. The following table summarizes the Company's contractual obligations. See Item 15 — Note 9,  Long-term Debt,  and Note 15,  Commitments and Contingencies , to the Consolidated Financial Statements for additional discussion.

 	By Remaining Maturity at December 31,	
 	2015	 	2014	
Contractual Cash Obligations	Under
1 Year	 	1-3 Years	 	3-5 Years	 	Over
5 Years	 	Total	 	Total	
 	(In millions)	
Long-term debt (including estimated interest)	$	454	
 	 	$	930	
 	 	$	1,866	
 	 	$	3,766	
 	 	$	7,016	
 	 	$	8,484	
 	
Operating leases	14	
 	 	20	
 	 	20	
 	 	165	
 	 	219	
 	 	241	
 	
Fuel purchase and transportation obligations	12	
 	 	9	
 	 	6	
 	 	21	
 	 	48	
 	 	53	
 	
Other liabilities	9	
 	 	18	
 	 	16	
 	 	62	
 	 	105	
 	 	118	
 	
Total	$	489	
 	 	$	977	
 	 	$	1,908	
 	 	$	4,014	
 	 	$	7,388	
 	 	$	8,896	

Fair Value of Derivative Instruments
The Company may enter into fuel purchase contracts and other energy-related financial instruments to mitigate variability in earnings due to fluctuations in spot market prices and to hedge fuel requirements at certain generation facilities. In addition, in order to mitigate interest rate risk associated with the issuance of variable rate debt, the Company enters into interest rate swap agreements.

20

The tables below disclose the activities of non-exchange traded contracts accounted for at fair value in accordance with ASC 820. Specifically, these tables disaggregate realized and unrealized changes in fair value; disaggregate estimated fair values at  December 31, 2015 , based on their level within the fair value hierarchy defined in ASC 820; and indicate the maturities of contracts at  December 31, 2015 . For a full discussion of the Company's valuation methodology of its contracts, see  Derivative Fair Value Measurements  in Item 15  — Note 6 ,  Fair Value of Financial Instruments , to the Consolidated Financial Statements.

Derivative Activity (Losses)/Gains	(In millions)	
Fair value of contracts as of December 31, 2014	$	(125	)	
Contracts realized or otherwise settled during the period	64	
 	
Changes in fair value	(39	)	
Fair Value of contracts as of December 31, 2015	$	(100	)	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Fair Value of contracts as of December 31, 2015	
 	Maturity	 	 	
Fair Value Hierarchy Losses	1 Year or Less	 	Greater Than 1 Year to 3 Years	 	Greater Than 3 Years to 5 Years	 	Greater Than 5 Years	 	Total Fair
Value	
 	(In millions)	
Level 2	$	(39	)	 	$	(38	)	 	$	(15	)	 	$	(8	)	 	$	(100	)	
The Company has elected to disclose derivative assets and liabilities on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. As discussed below in  Quantitative and Qualitative Disclosures about Market Risk -Commodity Price Risk,  NRG, on behalf of the  Company, measures the sensitivity of the portfolio to potential changes in market prices using VaR, a statistical model which attempts to predict risk of loss based on market price and volatility. NRG's risk management policy places a limit on one-day holding period VaR, which limits the net open position.

Critical Accounting Policies and Estimates
The Company's discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and related disclosures in compliance with U.S. GAAP requires the application of appropriate technical accounting rules and guidance as well as the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. The application of these policies necessarily involves judgments regarding future events, including the likelihood of success of particular projects, legal and regulatory challenges, and the fair value of certain assets and liabilities. These judgments, in and of themselves, could materially affect the financial statements and disclosures based on varying assumptions, which may be appropriate to use. In addition, the financial and operating environment may also have a significant effect, not only on the operation of the business, but on the results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even if the nature of the accounting policies has not changed.
On an ongoing basis, the Company evaluates these estimates, utilizing historic experience, consultation with experts and other methods the Company considers reasonable. In any event, actual results may differ substantially from the Company's estimates. Any effects on the Company's business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the information that gives rise to the revision becomes known.
The Company's significant accounting policies are summarized in Item 15 — Note 2, Summary of Significant Accounting Policies , to the Consolidated Financial Statements. The Company identifies its most critical accounting policies as those that are the most pervasive and important to the portrayal of the Company's financial position and results of operations, and that require the most difficult, subjective and/or complex judgments by management regarding estimates about matters that are inherently uncertain. The Company's critical accounting policies include income taxes and valuation allowance for deferred tax assets, impairment of long lived assets and other intangible assets, and acquisition accounting.

21

 	
 	 	
Accounting Policy	Judgments/Uncertainties Affecting Application	
 	 	
Income Taxes and Valuation Allowance for Deferred Tax Assets	Ability to withstand legal challenges of tax authority decisions or appeals	
 	Anticipated future decisions of tax authorities	
 	Application of tax statutes and regulations to transactions	
 	Ability to utilize tax benefits through carry backs to prior periods and carry forwards to future periods	
Impairment of Long Lived Assets	Recoverability of investments through future operations	
 	Regulatory and political environments and requirements	
 	Estimated useful lives of assets	
 	Operational limitations and environmental obligations	
 	Estimates of future cash flows	
 	Estimates of fair value	
 	Judgment about triggering events	
Acquisition Accounting	Identification of intangible assets acquired	
 	Inputs for fair value of assets and liabilities acquired	
 	Application of various methodologies	

Income Taxes and Valuation Allowance for Deferred Tax Assets
In assessing the recoverability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The realization of deferred tax assets is primarily dependent upon earnings in federal and various state and local jurisdictions.
The Company's operating entities, as former subsidiaries of NRG, continue to be under audit for multiple years by taxing authorities in other jurisdictions. Considerable judgment is required to determine the tax treatment of a particular item that involves interpretations of complex tax laws. The project-level entities, as former subsidiaries of NRG, are subject to examination by taxing authorities for income tax returns filed in the U.S. federal jurisdiction and various state and local jurisdictions. NRG is no longer subject to U.S. federal income tax examinations for years prior to 2012. With few exceptions, state and local income tax examinations are no longer open for years before 2009.
Evaluation of Assets for Impairment and Other Than Temporary Decline in Value
In accordance with ASC 360, Property, Plant, and Equipment, or ASC 360, property, plant and equipment and certain intangible assets are evaluated for impairment whenever indicators of impairment exist. Examples of such indicators or events are:
 	 	
•	Significant decrease in the market price of a long-lived asset;	
 	 	
•	Significant adverse change in the manner an asset is being used or its physical condition;	
 	 	
•	Adverse business climate;	
 	 	
•	Accumulation of costs significantly in excess of the amount originally expected for the construction or acquisition of an asset;	
 	 	
•	Current-period loss combined with a history of losses or the projection of future losses; and	
 	 	
•	Change in the Company's intent about an asset from an intent to hold to a greater than 50% likelihood that an asset will be sold or disposed of before the end of its previously estimated useful life.	
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net cash flows expected to be generated by the asset, through considering project specific assumptions for long-term power pool prices, escalated future project operating costs and expected plant operations. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets by factoring in the probability weighting of different courses of action available to us. Generally, fair value will be determined using valuation techniques such as the present value of expected future cash flows. The Company uses its best estimates in making these evaluations and considers various factors, including forward price curves for energy, fuel costs and operating costs. However, actual future market prices and project costs could vary from the assumptions used in the Company's estimates, and the impact of such variations could be material.

22

The Company is also required to evaluate its equity method investments to determine whether or not they are impaired. ASC 323,  Investments - Equity Method and Joint Ventures , or ASC 323, provides the accounting requirements for these investments. The standard for determining whether an impairment must be recorded under ASC 323 is whether the value is considered an "other than a temporary" decline in value. The evaluation and measurement of impairments under ASC 323 involves the same uncertainties as described for long-lived assets that the Company owns directly and accounts for in accordance with ASC 360. Similarly, the estimates that the Company makes with respect to its equity method investments are subjective, and the impact of variations in these estimates could be material. Additionally, if the projects in which the Company holds these investments recognize an impairment under the provisions of ASC 360, the Company would record its proportionate share of that impairment loss and would evaluate its investment for an other than temporary decline in value under ASC 323.
Acquisition Accounting
The Company applies ASC 805, Business Combinations, when accounting for the acquisition of a business, with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date. The Company completes the accounting for an acquisition when the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified up to one year from the date of the acquisition as more information is obtained about the fair value of assets acquired and liabilities assumed.  Consideration is measured based on fair value of the assets transferred to the seller.
Significant judgment is required in determining the acquisition date fair value of the assets acquired and liabilities assumed, predominantly with respect to property, plant and equipment, power purchase agreements, asset retirement obligations and other contractual arrangements. Evaluations include numerous inputs including  forecasted cash flows that incorporate the specific attributes of each asset including age, useful life, equipment condition and technology, as well as current replacement costs for similar assets. Other key inputs that require judgment include discount rates,  comparable market transactions, estimated useful lives and probability of future transactions. The Company evaluates all available information, as well as all appropriate methodologies when determining the fair value of assets acquired and liabilities assumed in a business combination. In addition, once the appropriate fair values are determined, the Company must determine the remaining useful life for property, plant and equipment and the amortization period and method of amortization for each finite-lived intangible asset.
Recent Accounting Developments
See Item 15 — Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for a discussion of recent accounting developments.

23

                                                                        

Exhibit 99.6
Item 15 — Exhibits, Financial Statement Schedules
(a)(1) Financial Statements
The following consolidated financial statements of NRG Yield, Inc. and related notes thereto, together with the reports thereon of KPMG LLP, are included herein:
Consolidated Statements of Income — Years ended December 31, 2015, 2014 and 2013 
Consolidated Statements of Comprehensive Income — Years ended December 31, 2015, 2014 and 2013 
Consolidated Balance Sheets — As of December 31, 2015 and 2014
Consolidated Statements of Cash Flows — Years ended December 31, 2015, 2014 and 2013 
Consolidated Statements of Stockholders' Equity — Years ended December 31, 2015, 2014 and 2013 
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedules
The following schedules of NRG Yield, Inc. are filed as part of Item 15 of this report and should be read in conjunction with the Consolidated Financial Statements:
NRG Yield, Inc. Financial Statements for the year ended December 31, 2015, 2014 and 2013, are included in NRG Yield, Inc.'s Annual Report on Form 10-K pursuant to the requirements of Rule 5-04(c) of Regulation S-X

1

                        

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
NRG Yield, Inc.:
We have audited the accompanying consolidated balance sheets of NRG Yield, Inc. and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2015. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule “Schedule I. Condensed Financial Information of Registrant.” These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NRG Yield, Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three‑year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), NRG Yield, Inc.’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 29, 2016 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

(signed) KPMG LLP
Philadelphia, PA
September 6, 2016

2

                        

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF INCOME

 	Year ended December 31,	
(In millions, except per share amounts)	2015 (a)	 	2014 (a)	 	2013 (a)	
Operating Revenues	 	 	 	 	 	
Total operating revenues	$	953	
 	 	$	828	
 	 	$	434	
 	
Operating Costs and Expenses	 	 	 	 	 	
Cost of operations	321	
 	 	277	
 	 	154	
 	
Depreciation and amortization	297	
 	 	233	
 	 	92	
 	
General and administrative	12	
 	 	8	
 	 	7	
 	
Acquisition-related transaction and integration costs	3	
 	 	4	
 	 	—	
 	
Total operating costs and expenses	633	
 	 	522	
 	 	253	
 	
Operating Income	320	
 	 	306	
 	 	181	
 	
Other Income (Expense)	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	26	
 	 	17	
 	 	20	
 	
Other income, net	3	
 	 	6	
 	 	4	
 	
Loss on extinguishment of debt	(9	)	 	(1	)	 	—	
 	
Interest expense	(263	)	 	(216	)	 	(72	)	
Total other expense, net	(243	)	 	(194	)	 	(48	)	
Income Before Income Taxes	77	
 	 	112	
 	 	133	
 	
Income tax expense	12	
 	 	4	
 	 	8	
 	
Net Income	65	
 	 	108	
 	 	125	
 	
Less: Pre-acquisition net (loss) income of Drop Down Assets	(10	)	 	44	
 	 	16	
 	
Net Income Excluding Pre-acquisition Net (Loss) Income of Drop Down Assets	75	
 	 	64	
 	 	109	
 	
Less: Predecessor income prior to initial public offering on July 22, 2013	—	
 	 	—	
 	 	54	
 	
Less: Net income attributable to noncontrolling interests	42	
 	 	48	
 	 	42	
 	
Net Income Attributable to NRG Yield, Inc.	$	33	
 	 	$	16	
 	 	$	13	
 	
Earnings Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders	 	 	 	 	 	
Weighted average number of Class A common shares outstanding - basic and diluted	35	
 	 	28	
 	 	23	
 	
Weighted average number of Class C common shares outstanding - basic and diluted	49	
 	 	28	
 	 	23	
 	
Earnings per Weighted Average Class A and Class C Common Share - Basic and Diluted	$	0.40	
 	 	$	0.30	
 	 	$	0.29	
 	
Dividends Per Class A Common Share	$	1.015	
 	 	$	1.42	
 	 	$	0.23	
 	
Dividends Per Class C Common Share	$	0.625	
 	 	N/A	
 	 	N/A	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

3

                        

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 	Year ended December 31,	
 	2015 (a)	 	2014 (a)	 	2013 (a)	
 	(In millions)	
Net Income	$	65	
 	 	$	108	
 	 	$	125	
 	
Other Comprehensive (Loss) Income, net of tax	 	 	 	 	 	
Unrealized (loss) gain on derivatives, net of income tax benefit (expense) of $10, $5, and ($16)	(7	)	 	(60	)	 	52	
 	
Other comprehensive (loss) income	(7	)	 	(60	)	 	52	
 	
Comprehensive Income	58	
 	 	48	
 	 	$	177	
 	
Less: Predecessor comprehensive income prior to initial public offering on July 22, 2013	—	
 	 	—	
 	 	73	
 	
Less: Pre-acquisition net (loss) income of Drop Down Assets	(10	)	 	44	
 	 	16	
 	
Less: Comprehensive income (loss) attributable to noncontrolling interests	53	
 	 	(3	)	 	73	
 	
Comprehensive Income Attributable to NRG Yield Inc.	$	15	
 	 	$	7	
 	 	$	15	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

4

                        

NRG YIELD, INC.
CONSOLIDATED BALANCE SHEETS

 	December 31, 2015 (a)	 	December 31, 2014 (a)	
ASSETS	(In millions)	
Current Assets	 	 	 	
Cash and cash equivalents	$	111	
 	 	$	429	
 	
Restricted cash	131	
 	 	130	
 	
Accounts receivable — trade	98	
 	 	93	
 	
Accounts receivable — affiliate	—	
 	 	28	
 	
Inventory	36	
 	 	32	
 	
Derivative instruments — affiliate	—	
 	 	2	
 	
Notes receivable	17	
 	 	16	
 	
Prepayments and other current assets	23	
 	 	98	
 	
Total current assets	416	
 	 	828	
 	
Property, plant and equipment	 	 	 	
In service	6,651	
 	 	6,487	
 	
Under construction	9	
 	 	9	
 	
Total property, plant and equipment	6,660	
 	 	6,496	
 	
Less accumulated depreciation	(782	)	 	(487	)	
Net property, plant and equipment	5,878	
 	 	6,009	
 	
Other Assets	 	 	 	
Equity investments in affiliates	697	
 	 	308	
 	
Notes receivable	30	
 	 	45	
 	
Intangible assets, net of accumulated amortization of $93 and $38	1,362	
 	 	1,424	
 	
Derivative instruments	—	
 	 	2	
 	
Deferred income taxes	170	
 	 	134	
 	
Other non-current assets	136	
 	 	44	
 	
Total other assets	2,395	
 	 	1,957	
 	
Total Assets	$	8,689	
 	 	$	8,794	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

5

                        

NRG YIELD, INC.
CONSOLIDATED BALANCE SHEETS (Continued)

 	December 31, 2015 (a)
	 	December 31, 2014 (a)	
LIABILITIES AND STOCKHOLDERS’ EQUITY	(In millions, except share information)	
Current Liabilities	 	 	 	
Current portion of long-term debt	$	264	
 	 	$	245	
 	
Accounts payable	23	
 	 	22	
 	
Accounts payable — affiliate	86	
 	 	48	
 	
Derivative instruments	39	
 	 	52	
 	
Accrued expenses and other current liabilities	77	
 	 	75	
 	
Total current liabilities	489	
 	 	442	
 	
Other Liabilities	 	 	 	
Long-term debt	5,329	
 	 	5,486	
 	
Derivative instruments	61	
 	 	77	
 	
Other non-current liabilities	72	
 	 	57	
 	
Total non-current liabilities	5,462	
 	 	5,620	
 	
Total Liabilities	5,951	
 	 	6,062	
 	
Commitments and Contingencies	

 	
 	
Stockholders' Equity	 	 	 	
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued	—	
 	 	—	
 	
Class A, Class B, Class C and Class D common stock, $0.01 par value; 3,000,000,000 shares authorized (Class A 500,000,000, Class B 500,000,000, Class C 1,000,000,000, Class D 1,000,000,000); 182,848,000 shares issued and outstanding (Class A 34,586,250, Class B 42,738,750, Class C 62,784,250, Class D 42,738,750) at December 31, 2015 and 154,650,000 shares issued and outstanding (Class A 34,586,250, Class B 42,738,750, Class C 34,586,250, Class D 42,738,750) at December 31, 2014	1	
 	 	—	
 	
Additional paid-in capital	1,855	
 	 	1,240	
 	
Retained earnings	12	
 	 	3	
 	
Accumulated other comprehensive loss	(27	)	 	(9	)	
Noncontrolling interest	897	
 	 	1,498	
 	
Total Stockholders' Equity	2,738	
 	 	2,732	
 	
Total Liabilities and Stockholders' Equity	$	8,689	
 	 	$	8,794	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

6

                        

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

 	Year ended December 31,	
 	2015 (a)	 	2014 (a)	 	2013 (a)	
 	(In millions)	
Cash Flows from Operating Activities	 	 	 	 	 	
Net income	$	65	
 	 	$	108	
 	 	$	125	
 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	(26	)	 	(17	)	 	(20	)	
Distributions from unconsolidated affiliates	43	
 	 	21	
 	 	16	
 	
Depreciation, amortization and accretion	299	
 	 	235	
 	 	93	
 	
Amortization of financing costs and debt discount/premiums	18	
 	 	13	
 	 	12	
 	
Amortization of intangibles and out-of-market contracts	54	
 	 	28	
 	 	1	
 	
Adjustment for debt extinguishment	9	
 	 	1	
 	 	—	
 	
Change in income taxes	12	
 	 	4	
 	 	8	
 	
Changes in derivative instruments	(45	)	 	(14	)	 	(21	)	
Noncash interest expense	—	
 	 	—	
 	 	13	
 	
Disposal of asset components	3	
 	 	—	
 	 	—	
 	
Changes in prepaid and accrued capacity payments	(12	)	 	—	
 	 	4	
 	
Changes in other working capital	(15	)	 	(17	)	 	(63	)	
Net Cash Provided by Operating Activities	405	
 	 	362	
 	
 	168	
 	
Cash Flows from Investing Activities	 	 	 	 	 	
Acquisition of businesses, net of cash acquired	(37	)	 	(901	)	 	(120	)	
Acquisition of Drop Down Assets, net of cash acquired	(698	)	 	(311	)	 	—	
 	
Capital expenditures	(29	)	 	(60	)	 	(782	)	
Receipt of indemnity from supplier	—	
 	 	57	
 	 	—	
 	
(Increase) decrease in restricted cash	(1	)	 	25	
 	 	(90	)	
Decrease in notes receivable, including affiliates	17	
 	 	14	
 	 	(4	)	
Proceeds from renewable energy grants	—	
 	 	422	
 	 	25	
 	
Return of investment from unconsolidated affiliates	42	
 	 	4	
 	 	6	
 	
Investments in unconsolidated affiliates	(402	)	 	—	
 	 	—	
 	
Other	—	
 	 	11	
 	 	—	
 	
Net Cash Used in Investing Activities	(1,108	)	 	(739	)	
 	(965	)	
Cash Flows from Financing Activities	 	 	 	 	 	
Contributions from tax equity investors	122	
 	 	190	
 	 	—	
 	
Capital contributions from NRG	—	
 	 	2	
 	 	171	
 	
Net distributions and return of capital to NRG prior to the acquisition of Drop Down Assets and IPO	(59	)	 	(335	)	 	(648	)	
Proceeds from the issuance of common stock	599	
 	 	630	
 	 	468	
 	
Payment of dividends and distributions	(139	)	 	(101	)	 	(15	)	
Proceeds from long-term debt — external	293	
 	 	523	
 	 	933	
 	
Payments of long-term debt — external	(724	)	 	(626	)	 	(72	)	
Net borrowings from the revolving credit facility	306	
 	 	500	
 	 	—	
 	
Payment of debt issuance costs	(13	)	 	(36	)	 	(5	)	
Payments for long-term debt — affiliate	—	
 	 	—	
 	 	(2	)	
Gain on settlement of swaptions	—	
 	 	—	
 	 	4	
 	
Net Cash Provided by Financing Activities	385	
 	 	747	
 	 	834	
 	
Net (Decrease) Increase in Cash and Cash Equivalents	(318	)	 	370	
 	 	37	
 	
Cash and Cash Equivalents at Beginning of Period	429	
 	 	59	
 	 	22	
 	
Cash and Cash Equivalents at End of Period	$	111	
 	 	$	429	
 	 	$	59	

Supplemental Disclosures	 	 	 	 	 	
Interest paid, net of amount capitalized	$	(274	)	 	$	(192	)	 	$	(63	)	
Non-cash investing and financing activities:	 	 	 	 	 	
Additions (reductions) to fixed assets for accrued capital expenditures	1	
 	 	(21	)	 	3	
 	
Increase (decrease) to fixed assets for grant shortfall (accrued grants)	—	
 	 	34	
 	 	(547	)	
Increase (decrease) to fixed assets for deferred tax asset	19	
 	 	7	
 	 	(112	)	
Non-cash addition to additional paid-in capital for change in tax basis of property, plant and equipment for assets acquired from NRG	38	
 	 	(14	)	 	153	
 	
Increase in debt due to accrued interest converted to debt	—	
 	 	11	
 	 	—	
 	
Non-cash return of capital and distributions to NRG, net of contributions	$	(13	)	 	$	1,058	
 	 	$	(55	)	

 	
 	
(a)  Retrospectively adjusted as discussed in Note 1, Nature of Business.
See accompanying notes to consolidated financial statements.

7

                        

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In millions)	Preferred Stock	 	Common Stock	 	Additional
Paid-In
Capital	 	Retained Earnings	 	Accumulated
Other
Comprehensive
Income (Loss)	 	Noncontrolling
Interest	 	Members' Equity	 	Total
Members'/Stockholders'
Equity	
Balances at December 31, 2012  (a)	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	1,242	
 	 	$	1,242	
 	
Members' equity - Acquired Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	99	
 	 	99	
 	
Balances at December 31, 2012	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	1,341	
 	 	1,341	
 	
Net income	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	54	
 	 	54	
 	
Pre-acquisition net loss of acquired Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(6	)	 	(6	)	
Unrealized gain on derivatives, net of tax	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	41	
 	 	41	
 	
Capital contributions from NRG, cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	213	
 	 	213	
 	
Capital contributions from NRG, non-cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	71	
 	 	71	
 	
Dividends and return of capital to NRG, cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(312	)	 	(312	)	
Dividends and return of capital to NRG, non-cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(55	)	 	(55	)	
Balance as of July 22, 2013	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	1,347	
 	 	$	1,347	
 	
Net income	—	
 	 	—	
 	 	—	
 	 	13	
 	 	—	
 	 	42	
 	 	—	
 	 	55	
 	
Pre-acquisition net income of acquired Drop Down Assets  (c)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	22	
 	 	—	
 	 	22	
 	
Unrealized (loss) gain on derivatives, net	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(3	)	 	10	
 	 	—	
 	 	7	
 	
Capital contributions from NRG, cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	17	
 	 	—	
 	 	17	
 	
Distributions and return of capital to NRG, net of contributions, non-cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(28	)	 	—	
 	 	(28	)	
Distributions and return of capital to NRG, cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(395	)	 	(395	)	
Transfer of predecessors' equity to noncontrolling interest	—	
 	 	—	
 	 	—	
 	 	—	
 	 	3	
 	 	949	
 	 	(952	)	 	—	
 	
Reduction to non-controlling interest, non-cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(43	)	 	—	
 	 	(43	)	
Common shares issued in public offering	—	
 	 	—	
 	 	468	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	468	
 	
Adjustment for change in tax basis of property, plant and equipment, non-cash	—	
 	 	—	
 	 	153	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	153	
 	
Common stock dividends	—	
 	 	—	
 	 	—	
 	 	(5	)	 	—	
 	 	(10	)	 	—	
 	 	(15	)	
Balances at December 31, 2013	$	—	
 	 	$	—	
 	 	$	621	
 	 	$	8	
 	 	$	—	
 	 	$	959	
 	 	$	—	
 	 	$	1,588	
 	
Net income	—	
 	 	—	
 	 	—	
 	 	16	
 	 	—	
 	 	48	
 	 	—	
 	 	64	
 	
Pre-acquisition net income of acquired Drop Down Assets  (c)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	44	
 	 	—	
 	 	44	
 	
Unrealized loss on derivatives, net of tax  (c)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(9	)	 	(51	)	 	—	
 	 	(60	)	
Payment for June 2014 Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(357	)	 	—	
 	 	(357	)	
Capital contributions from NRG, non-cash  (b)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	1,058	
 	 	—	
 	 	1,058	
 	
Distributions and returns of capital to NRG net of contributions, cash  (c)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(333	)	 	—	
 	 	(333	)	
Capital contributions from tax equity investors	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	190	
 	 	—	
 	 	190	
 	
Proceeds from the issuance of Class A common stock	—	
 	 	—	
 	 	630	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	630	
 	
Non-cash adjustment for change in tax basis of property, plant and equipment	—	
 	 	—	
 	 	(14	)	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(14	)	
Equity portion of the Convertible Notes due 2019	—	
 	 	—	
 	 	23	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	23	
 	
Common stock dividends	—	
 	 	—	
 	 	(20	)	 	(21	)	 	—	
 	 	(60	)	 	—	
 	 	(101	)	
Balances at December 31, 2014	$	—	
 	 	$	—	
 	 	$	1,240	
 	 	$	3	
 	 	$	(9	)	 	$	1,498	
 	 	$	—	
 	 	$	2,732	
 	
Net income	—	
 	 	—	
 	 	—	
 	 	33	
 	 	—	
 	 	42	
 	 	—	
 	 	75	
 	
Pre-acquisition net loss of acquired Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(10	)	 	—	
 	 	(10	)	
Unrealized loss on derivatives, net of tax	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(18	)	 	11	
 	 	—	
 	 	(7	)	
Payment for January 2015 Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(489	)	 	—	
 	 	(489	)	
Payment for November 2015 Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(209	)	 	—	
 	 	(209	)	
Capital contributions from tax equity investors	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	122	
 	 	—	
 	 	122	
 	
Noncontrolling interest acquired in Spring Canyon acquisition	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	74	
 	 	—	
 	 	74	
 	
Distributions and return of capital to NRG, cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(59	)	 	—	
 	 	(59	)	
Distributions and return of capital to NRG, net of contributions, non-cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(13	)	 	—	
 	 	(13	)	
Stock-based compensation	—	
 	 	—	
 	 	1	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	1	
 	
Proceeds from the issuance of Class C Common Stock	—	
 	 	1	
 	 	598	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	599	
 	
Non-cash adjustment for change in tax basis of property, plant and equipment	—	
 	 	—	
 	 	38	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	38	
 	
Equity portion of the Convertible Notes due 2021	—	
 	 	—	
 	 	23	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	23	
 	
Common stock dividends	—	
 	 	—	
 	 	(45	)	 	(24	)	 	—	
 	 	(70	)	 	—	
 	 	(139	)	
Balance as of December 31, 2015	$	—	
 	 	$	1	
 	 	$	1,855	
 	 	$	12	
 	 	$	(27	)	 	$	897	
 	 	$	—	
 	 	$	2,738	

 	

(a) As previously reported in the Company's audited financial statements for the year ended December 31, 2014, included in the Form 8-K dated May 22, 2015.
(b) Capital contributions from NRG, non-cash, primarily represent Drop Down Assets' equity transferred from NRG to the Company in accordance with guidance on business combinations between entities under common control, as further described in Note 1,  Nature of Business.
(c) Retrospectively adjusted, as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

8

                        

NRG YIELD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Nature of Business
NRG Yield, Inc., together with its consolidated subsidiaries, or the Company, is a dividend growth-oriented company formed by NRG as a Delaware corporation on December 20, 2012, to serve as the primary vehicle through which NRG owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets.  The Company used the net proceeds from its initial public offering of Class A common stock on July 22, 2013, to acquire 19,011,250 Class A units of NRG Yield LLC from NRG, as well as 3,500,000 Class A units directly from NRG Yield LLC. At the time of the offering, NRG owned 42,738,750 NRG Yield LLC Class B units. NRG Yield LLC, through its wholly owned subsidiary, NRG Yield Operating LLC, is a holder of a portfolio of renewable and conventional generation and thermal infrastructure assets, primarily located in the Northeast, Southwest and California regions of the U.S.
On July 29, 2014, the Company issued 12,075,000 shares of Class A common stock for net proceeds, after underwriting discount and expenses, of $630 million. The Company utilized the proceeds of the offering to acquire 12,075,000 additional Class A units of NRG Yield LLC. On May 14, 2015, the Company completed a stock split in connection with which each outstanding share of Class A common stock was split into one share of Class A common stock and one share of Class C common stock, and each outstanding share of Class B common stock was split into one share of Class B common stock and one share of Class D common stock. The stock split is referred to as the Recapitalization and all references to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retrospectively adjusted to reflect the Recapitalization. In addition, on June 29, 2015, the Company completed the issuance of 28,198,000 shares of Class C common stock for net proceeds of $599 million. See further discussion in Note 11,  Stockholders' Equity .
The holders of the Company's issued and outstanding shares of Class A and Class C common stock are entitled to dividends as declared. NRG receives its distributions from NRG Yield LLC through its ownership of NRG Yield LLC Class B and Class D units.
The following table represents the structure of the Company as of December 31, 2015:        

9

                        

For the periods prior to the initial public offering, the accompanying combined financial statements represent the combination of the assets that NRG Yield LLC acquired and were prepared using NRG's historical basis in the assets and liabilities. For the purposes of the combined financial statements, the term "NRG Yield" represents the accounting predecessor, or the combination of the acquired businesses. For all periods subsequent to the initial public offering, the accompanying audited consolidated financial statements represent the consolidated results of the Company, which consolidates NRG Yield LLC through its controlling interest.
As of December 31, 2015, the Company's operating assets are comprised of the following projects:

Projects	 	Percentage Ownership	 	Net Capacity (MW)  (a)	 	Offtake Counterparty	 	Expiration	
Conventional	 	 	 	 	 	 	 	 	
El Segundo	 	100	%	 	550	
 	 	Southern California Edison	 	2023	
GenConn Devon(b)	 	50	%	 	95	
 	 	Connecticut Light & Power	 	2040	
GenConn Middletown (b)	 	50	%	 	95	
 	 	Connecticut Light & Power	 	2041	
Marsh Landing	 	100	%	 	720	
 	 	Pacific Gas and Electric	 	2023	
Walnut Creek	 	100	%	 	485	
 	 	Southern California Edison	 	2023	
 	 	 	 	1,945	
 	 	 	 	 	
Utility Scale Solar	 	 	 	 	 	 	 	 	
Alpine	 	100	%	 	66	
 	 	Pacific Gas and Electric	 	2033	
Avenal (b)	 	50	%	 	23	
 	 	Pacific Gas and Electric	 	2031	
Avra Valley	 	100	%	 	26	
 	 	Tucson Electric Power	 	2032	
Blythe	 	100	%	 	21	
 	 	Southern California Edison	 	2029	
Borrego	 	100	%	 	26	
 	 	San Diego Gas and Electric	 	2038	
CVSR	 	100	%	 	250	
 	 	Pacific Gas and Electric	 	2038	
Desert Sunlight 250	 	25	%	 	63	
 	 	Southern California Edison	 	2035	
Desert Sunlight 300	 	25	%	 	75	
 	 	Pacific Gas and Electric	 	2040	
Kansas South	 	100	%	 	20	
 	 	Pacific Gas and Electric	 	2033	
Roadrunner	 	100	%	 	20	
 	 	El Paso Electric	 	2031	
TA High Desert	 	100	%	 	20	
 	 	Southern California Edison	 	2033	
 	 	 	 	610	
 	 	 	 	 	
Distributed Solar	 	 	 	 	 	 	 	 	
AZ DG Solar Projects	 	100	%	 	5	
 	 	Various	 	2025 - 2033	
PFMG DG Solar Projects	 	51	%	 	4	
 	 	Various	 	2032	
 	 	 	 	9	
 	 	 	 	 	
Wind	 	 	 	 	 	 	 	 	
Alta I	 	100	%	 	150	
 	 	Southern California Edison	 	2035	
Alta II	 	100	%	 	150	
 	 	Southern California Edison	 	2035	
Alta III	 	100	%	 	150	
 	 	Southern California Edison	 	2035	
Alta IV	 	100	%	 	102	
 	 	Southern California Edison	 	2035	
Alta V	 	100	%	 	168	
 	 	Southern California Edison	 	2035	
Alta X (c)(d)	 	100	%	 	137	
 	 	Southern California Edison	 	2038	
Alta XI (c)(d)	 	100	%	 	90	
 	 	Southern California Edison	 	2038	
Buffalo Bear	 	100	%	 	19	
 	 	Western Farmers Electric Co-operative	 	2033	
Crosswinds	 	74.3	%	 	16	
 	 	Corn Belt Power Cooperative	 	2027	
Elbow Creek	 	75	%	 	92	
 	 	NRG Power Marketing LLC	 	2022	
Elkhorn Ridge	 	50.3	%	 	41	
 	 	Nebraska Public Power District	 	2029	
Forward	 	75	%	 	22	
 	 	Constellation NewEnergy, Inc.	 	2017	
Goat Wind	 	74.9	%	 	113	
 	 	Dow Pipeline Company	 	2025	
Hardin	 	74.3	%	 	11	
 	 	Interstate Power and Light Company	 	2027	
Laredo Ridge	 	100	%	 	80	
 	 	Nebraska Public Power District	 	2031	
Lookout	 	75	%	 	29	
 	 	Southern Maryland Electric Cooperative	 	2030	
Odin	 	74.9	%	 	15	
 	 	Missouri River Energy Services	 	2028	
Pinnacle	 	100	%	 	55	
 	 	Maryland Department of General Services and University System of Maryland	 	2031	
San Juan Mesa	 	56.3	%	 	68	
 	 	Southwestern Public Service Company	 	2025	

10

                        

 	
 	 	 	 	 	 	 	 	 	 	 	
Projects	 	Percentage Ownership	 	Net Capacity (MW)  (a)	 	Offtake Counterparty	 	Expiration	
Sleeping Bear	 	75	%	 	71	
 	 	Public Service Company of Oklahoma	 	2032	
South Trent	 	100	%	 	101	
 	 	AEP Energy Partners	 	2029	
Spanish Fork	 	75	%	 	14	
 	 	PacifiCorp	 	2028	
Spring Canyon II (c)	 	90.1	%	 	29	
 	 	Platte River Power Authority	 	2039	
Spring Canyon III (c)	 	90.1	%	 	25	
 	 	Platte River Power Authority	 	2039	
Taloga	 	100	%	 	130	
 	 	Oklahoma Gas & Electric	 	2031	
Wildorado	 	74.9	%	 	121	
 	 	Southwestern Public Service Company	 	2027	
 	 	 	 	1,999	
 	 	 	 	 	
Thermal	 	 	 	 	 	 	 	 	
Thermal equivalent MWt(e)	 	100	%	 	1,315	
 	 	Various	 	Various	
Thermal generation	 	100	%	 	124	
 	 	Various	 	Various	
 	 	 	 	 	 	 	 	 	
Total net capacity (excluding equivalent MWt)  (f)	 	 	 	4,687	

 	

(a)  Net capacity represents the maximum, or rated, generating capacity of the facility multiplied by the Company's percentage ownership in the facility as of December 31, 2015.
(b)  On September 30, 2015, the Company acquired NRG's remaining 0.05% for an immaterial amount.
(c)  Projects are part of tax equity arrangements, as further described in Note 2, Summary of Significant Accounting Policies andNote 5, Investments Accounted for by the Equity Method and Variable Interest Entities .
(d)  PPA began on January 1, 2016.
(e)  For thermal energy, net capacity represents MWt for steam or chilled water and excludes 134 MWt available under the right-to-use provisions contained in agreements between two of the Company's thermal facilities and certain of its customers.
(f)  Total net capacity excludes capacity for RPV Holdco and DGPV Holdco, which are consolidated by NRG, as further described in Note 5, Investments Accounted for by the Equity Method and Variable Interest Entities.
Substantially all of the Company's generation assets are under long-term contractual arrangements for the output or capacity from these assets. The thermal assets are comprised of district energy systems and combined heat and power plants that produce steam, hot water and/or chilled water and in some instances, electricity at a central plant. Three of the district energy systems are subject to rate regulation by state public utility commissions while the other district energy systems have rates determined by negotiated bilateral contracts.
The historical combined financial statements include allocations of certain NRG corporate expenses. Management believes the assumptions and methodology underlying the allocation of general corporate overhead expenses are reasonable. The allocated costs include legal, accounting, tax, treasury, information technology, insurance, employee benefit costs, and other corporate costs. However, such expenses may not be indicative of the actual level of expense that would have been incurred if the Company had operated as an independent, publicly-traded company during the period prior to the offering or of the costs expected to be incurred in the future. Allocations of NRG corporate expenses were $3 million for the period from January 1, 2013, through July 22, 2013. In connection with the initial public offering, the Company entered into a management services agreement with NRG for various services, including human resources, accounting, tax, legal, information systems, treasury, and risk management. Costs incurred by the Company under this agreement were $3 million for the period from July 23, 2013, through December 31, 2013, $6 million for the year ended December 31, 2014 and $8 million for the year ended December 31, 2015, which included certain direct expenses incurred by NRG on behalf of the Company.
For the period prior to the initial public offering, members' equity represents the combined equity of the Company's subsidiaries, including adjustments necessary to present the Company's financial statements as if the Company were in existence as of the beginning of the periods presented. Member's equity represents NRG's equity in the subsidiaries, and accordingly, in connection with the initial public offering, the historical equity balance as of that date was reclassified into noncontrolling interest. Subsequent to the initial public offering, stockholders' equity represents the equity associated with the Class A and Class C common stockholders, with the equity associated with the Class B and Class D common stockholders, or NRG, classified as noncontrolling interest.
As described in Note 3, Business Acquisitions, the Company has completed acquisitions of Drop Down Assets from NRG as follows:
 	 	
•	On September 1, 2016, the Company acquired the remaining 51.05% of CVSR, or the CVSR Drop Down, which indirectly owns the CVSR solar facility, for cash consideration of $78.5 million plus assumed project level debt of $496 million.	

11

                        

•	On November 3, 2015, the Company acquired 75% of the Class B interests of NRG Wind TE Holdco, or the November 2015 Drop Down Assets, for total cash consideration of $209 million. In February 2016, NRG made a final working capital payment of $2 million, reducing total cash consideration to $207 million. The Company is responsible for its pro-rata share of non-recourse project debt of $193 million and noncontrolling interest associated with a tax equity structure of $159 million (as of the acquisition date).	
 	 	
•	On January 2, 2015, the Company acquired the Laredo Ridge, Tapestry, and Walnut Creek projects, or the January 2015 Drop Down Assets, for total cash consideration of $489 million, plus assumed project-level debt of $737 million.	
 	 	
•	On June 30, 2014, the Company acquired the TA High Desert, Kansas South, and El Segundo projects from NRG for total cash consideration of $357 million plus assumed project level debt of $612 million.	
The guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Accordingly, the Company prepared its consolidated financial statements and the notes to the consolidated financial statements to reflect the transfers as if they had taken place from the beginning of the financial statements period, or from the date the entities were under common control (if later than the beginning of the financial statements period), which was May 13, 2013 for Kansas South, March 28, 2013 for TA High Desert, and April 1, 2014 for the January 2015 Drop Down Assets and the majority of the November 2015 Drop Down Assets, and which represent the dates these entities were acquired by NRG. The recast did not affect net income attributable to NRG Yield, Inc., weighted average number of shares outstanding, earnings per common share, or dividends. With respect to the November 2015 Drop Down Asset acquisition, the Company has recorded all minority interests in NRG Wind TE Holdco as noncontrolling interest in the Consolidated Financial Statements for all periods presented.
With respect to the CVSR Drop Down, prior to the transaction, the Company recorded its 48.95% interest in CVSR as an equity method investment. In connection with the retrospective adjustment of prior periods, the Company has removed the equity method investment from all prior periods and adjusted its financial statements to reflect its results of operations, financial position and cash flows as if it had consolidated CVSR from the beginning of the financial statement period.

Note 2 — Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The Company's consolidated and combined financial statements have been prepared in accordance with U.S. GAAP. The FASB ASC is the source of authoritative U.S. GAAP to be applied by nongovernmental entities. In addition, the rules and interpretative releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants.
The consolidated and combined financial statements include the Company's accounts and operations and those of its subsidiaries in which it has a controlling interest. All significant intercompany transactions and balances have been eliminated in consolidation. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an entity. However, a controlling financial interest may also exist through arrangements that do not involve controlling voting interests. As such, the Company applies the guidance of ASC 810,  Consolidations,  or ASC 810, to determine when an entity that is insufficiently capitalized or not controlled through its voting interests, referred to as a variable interest entity, or VIE, should be consolidated.
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. Cash and cash equivalents held at project subsidiaries was $93 million and $74 million as of December 31, 2015, and 2014, respectively.
Restricted Cash
Restricted cash consists primarily of funds held to satisfy the requirements of certain debt agreements and funds held within the Company's projects that are restricted in their use. Of these funds as of December 31, 2015, approximately $26 million is designated for current debt service payments, $33 million is designated to fund operating expenses and $7 million is designated for distributions to the Company, with the remaining $65 million restricted for reserves including debt service, performance obligations and other reserves as well as capital expenditures.

12

                        

Trade Receivables and Allowance for Doubtful Accounts
Trade receivables are reported on the 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 immaterial as of December 31, 2015, and 2014.
Inventory
Inventory consists principally of spare parts and fuel oil and is valued at the weighted average cost, unless evidence indicates that the weighted average cost will be recovered with a normal profit in the ordinary course of business. The Company removes fuel inventories as they are used in the production of steam, chilled water or electricity. Spare parts inventory are removed when they are used for repairs, maintenance or capital projects.
NRG Indemnity Receivable
NRG previously applied for cash grants in lieu of investment tax credits from the U.S. Treasury Department in the amount of $414 million for the CVSR project, which is a qualified renewable energy project. In 2013, an initial $30 million 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.
In addition, the related deferred tax assets of $106 million recognizable by NRG were recorded as a non-cash distribution to NRG and a corresponding reduction to the related property, plant, and equipment. In connection with the cash grants and related tax assets, the book value of the CVSR's property, plant, and equipment was reduced by a total of $490 million.
In 2014, cash grant proceeds of $285 million were received from the U.S. Treasury. The sequestration reserve was increased to $54 million based on the actual cash grant awarded. As of December 31, 2015, the remaining $75 million was receivable as the balance is expected to be fully recovered from the current litigation with SunPower pursuant to the existing indemnity on the project. Pursuant to the purchase and sale agreement for the CVSR project between NRG and SunPower, SunPower agreed to indemnify NRG up to $75 million if the U.S. Treasury Department made certain determinations and awarded a reduced 1603 cash grant for the project.  In 2014, NRG filed a lawsuit with respect to the indemnity against SunPower in California state court. Separately, liquidated damages related to the cash grant shortfall of $57 million were received from SunPower and recorded as a reduction to the cost of the related property, plant and equipment. Subsequent to the receipt of this payment and in connection with the SunPower litigation, it was determined that SunPower overpaid by $7 million. Accordingly, during 2016 CVSR recorded a payable to SunPower for $7 million with a corresponding increase to the related property, plant and equipment.
The agreement between NRG and the Company for the CVSR Drop Down specified that all amounts related to the litigation with SunPower are excluded from the acquisition. Accordingly, prior to close of the transaction, the $75 million receivable and $7 million payable were transferred to NRG as a net reduction to its ownership interest in CVSR.
Property, Plant and Equipment
Property, plant and equipment are stated at cost or, in the case of business acquisitions, fair value; however impairment adjustments are recorded whenever events or changes in circumstances indicate that their carrying values may not be recoverable. See Note 3,  Business Acquisitions,  for more information on acquired property, plant and equipment. Significant additions or improvements extending asset lives are capitalized as incurred, while repairs and maintenance that do not improve or extend the life of the respective asset are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives. Certain assets and their related accumulated depreciation amounts are adjusted for asset retirements and disposals with the resulting gain or loss included in cost of operations in the consolidated statements of operations.
Additionally, the Company reduces the book value of the property, plant and equipment of its eligible renewable energy projects for any cash grants that are submitted to the U.S. Treasury Department when the receivable is recorded for the net realizable amount. The related deferred tax asset is also recorded with a corresponding reduction to the book value of the property, plant and equipment.

13

                        

Asset Impairments
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 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 statements of operations. Fair values are determined by a variety of valuation methods, including appraisals, sales prices of similar assets and present value techniques.
Investments accounted for by the equity method are reviewed for impairment in accordance with ASC 323, Investments-Equity Method and Joint Ventures , which requires that a loss in value of an investment that is other than a temporary decline should be recognized. The Company identifies and measures losses in the value of equity method investments based upon a comparison of fair value to carrying value.
Capitalized Interest
Interest incurred on funds borrowed to finance capital projects is capitalized, until the project under construction is ready for its intended use. The amount of interest capitalized for the year ended December 31, 2013, was $26 million. The Company recorded less than $1 million of capitalized interest during the years ended December 31, 2015, and 2014.
When a project is available for operations, capitalized interest is reclassified to property, plant and equipment and depreciated on a straight-line basis over the estimated useful life of the project's related assets.
Debt Issuance Costs
Debt issuance costs are capitalized and amortized as interest expense on a basis which approximates the effective interest method over the term of the related debt. As discussed below, as of December 31, 2015, the Company adopted ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , and reclassified debt issuance costs to be presented as a direct deduction from the carrying amount of the related debt in both the current and prior periods.
Intangible Assets
Intangible assets represent contractual rights held by the Company. The Company recognizes specifically identifiable intangible assets including customer contracts, customer relationships, power purchase agreements and development rights when specific rights and contracts are acquired. These intangible assets are amortized primarily on a straight-line basis.
Notes Receivable
Notes receivable consists of receivables related to the financing of required network upgrades. The notes issued with respect to network upgrades will be repaid within a 5 year period following the date each facility reaches commercial operations.
Income Taxes
The Company accounts for income taxes using the liability method in accordance with ASC 740, Income Taxes, or ASC 740, which requires that it use the asset and liability method of accounting for deferred income taxes and provide deferred income taxes for all significant temporary differences.
The Company has two categories of income tax expense or benefit — current and deferred, as follows:
 	 	
•	Current income tax expense or benefit consists solely of current taxes payable less applicable tax credits, and	
 	 	
•	Deferred income tax expense or benefit is the change in the net deferred income tax asset or liability, excluding amounts charged or credited to accumulated other comprehensive income.	
The Company reports some of its revenues and expenses differently for financial statement purposes than for income tax return purposes, resulting in temporary and permanent differences between the Company's financial statements and income tax returns. The tax effects of such temporary differences are recorded as either deferred income tax assets or deferred income tax liabilities in the Company's consolidated balance sheets. The Company measures its deferred income tax assets and deferred income tax liabilities using income tax rates that are currently in effect. The Company believes it is more likely than not that the results of future operations will generate sufficient taxable income which includes the future reversal of existing taxable temporary differences to realize deferred tax assets, net of valuation allowances. A valuation allowance is recorded to reduce the net deferred tax assets to an amount that is more-likely-than-not to be realized.

14

                        

The Company accounts for uncertain tax positions in accordance with ASC 740, which applies to all tax positions related to income taxes. Under ASC 740, tax benefits are recognized when it is more-likely-than-not that a tax position will be sustained upon examination by the authorities. The benefit recognized from a position that has surpassed the more-likely-than-not threshold is the largest amount of benefit that is more than 50% likely to be realized upon settlement. The Company recognizes interest and penalties accrued related to uncertain tax benefits as a component of income tax expense.
In accordance with ASC 805 and as discussed further in Note 13, Income Taxes, changes to existing net deferred tax assets or valuation allowances or changes to uncertain tax benefits, are recorded to income tax expense.
Revenue Recognition
Thermal Revenues
Steam and chilled water revenue is recognized based on customer usage as determined by meter readings taken at month-end. Some locations read customer meters throughout the month, and recognize estimated revenue for the period between meter read date and month-end. The Thermal Business subsidiaries collect and remit state and local taxes associated with sales to their customers, as required by governmental authorities. These taxes are presented on a net basis in the income statement.
Power Purchase Agreements, or PPAs
The majority of the Company’s revenues are obtained through PPAs or other contractual agreements. In order to determine lease classification as operating, the Company evaluates the terms of the PPA to determine if the lease includes any of the following provisions which would indicate capital lease treatment:
•Transfers the ownership of the generating facility,
•Bargain purchase option at the end of the term of the lease,
•Lease term is greater than 75% of the economic life of the generating facility, or
 	 	
•	Present value of minimum lease payments exceeds 90% of the fair value of the generating facility at inception of the lease	
In considering the above it was determined that all of Company’s PPAs are operating leases. ASC 840 requires the minimum lease payments received to be amortized over the term of the lease and contingent rentals are recorded when the achievement of the contingency becomes probable. Judgment is required by management in determining the economic life of each generating facility, in evaluating whether certain lease provisions constitute minimum payments or represent contingent rent and other factors in determining whether a contract contains a lease and whether the lease is an operating lease or capital lease.
Certain of these leases have no minimum lease payments and all of the rental income under these leases is recorded as contingent rent on an actual basis when the electricity is delivered. The contingent rental income recognized in the years ended December 31, 2015, 2014 and 2013 was $416 million, $296 million and $135 million, respectively.
Derivative Financial Instruments
The Company accounts for derivative financial instruments under ASC 815, Derivatives and Hedging, or ASC 815, which requires the Company to record all derivatives on the balance sheet at fair value unless they qualify for a NPNS exception. Changes in the fair value of non-hedge derivatives are immediately recognized in earnings. Changes in the fair value of derivatives accounted for as hedges, if elected for hedge accounting, are either:
 	 	
•	Recognized in earnings as an offset to the changes in the fair value of the related hedged assets, liabilities and firm commitments; or	
 	 	
•	Deferred and recorded as a component of accumulated OCI until the hedged transactions occur and are recognized in earnings.	

15

                        

The Company's primary derivative instruments are power sales contracts used to mitigate variability in earnings due to fluctuations in market prices, fuels purchase contracts used to control customer reimbursable fuel cost, and interest rate instruments used to mitigate variability in earnings due to fluctuations in interest rates. On an ongoing basis, the Company assesses the effectiveness of all derivatives that are designated as hedges for accounting purposes in order to determine that each derivative continues to be highly effective in offsetting changes in fair values or cash flows of hedged items. Internal analyses that measure the statistical correlation between the derivative and the associated hedged item determine the effectiveness of such a contract designated as a hedge. If it is determined that the derivative instrument is not highly effective as a hedge, hedge accounting will be discontinued prospectively. In this case, the gain or loss previously deferred in accumulated OCI would be frozen until the underlying hedged item is delivered unless the transaction being hedged is no longer probable of occurring in which case the amount in OCI would be immediately reclassified into earnings. If the derivative instrument is terminated, the effective portion of this derivative deferred in accumulated OCI will be frozen until the underlying hedged item is delivered.
Revenues and expenses on contracts that qualify for the NPNS exception are recognized when the underlying physical transaction is delivered. While these contracts are considered derivative financial instruments under ASC 815, they are not recorded at fair value, but on an accrual basis of accounting. If it is determined that a transaction designated as NPNS no longer meets the scope exception, the fair value of the related contract is recorded on the balance sheet and immediately recognized through earnings.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable, notes receivable and derivative instruments, which are concentrated within entities engaged in the energy and financial industry. These industry concentrations may impact the overall exposure to credit risk, either positively or negatively, in that the customers may be similarly affected by changes in economic, industry or other conditions. In addition, many of the Company's projects have only one customer. However, the Company believes that the credit risk posed by industry concentration is offset by the diversification and creditworthiness of its customer base. See Note 6,  Fair Value of Financial Instruments,  for a further discussion of derivative concentrations and Note 12,  Segment Reporting , for concentration of counterparties.
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, intercompany accounts payable and receivable, and accrued expenses and other liabilities approximate fair value because of the short-term maturity of these instruments. See Note 6,  Fair Value of Financial Instruments,  for a further discussion of fair value of financial instruments.
Asset Retirement Obligations
Asset retirement obligations, or AROs, are accounted for in accordance with ASC 410-20, Asset Retirement Obligations, or 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 asset retirement cost is capitalized 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 asset retirement obligations were $43 million and $32 million as of December 31, 2015, and 2014, respectively. The Company records AROs as part of other non-current liabilities on its balance sheet.

16

                        

Guarantees
The Company enters into various contracts that include indemnification and guarantee provisions as a routine part of its business activities. Examples of these contracts include EPC agreements, operation and maintenance agreements, service agreements, commercial sales arrangements and other types of contractual agreements with vendors and other third parties, as well as affiliates. These contracts generally indemnify the counterparty for tax, environmental liability, litigation and other matters, as well as breaches of representations, warranties and covenants set forth in these agreements. Because many of the guarantees and indemnities the Company issues to third parties and affiliates do not limit the amount or duration of its obligations to perform under them, there exists a risk that the Company may have obligations in excess of the amounts agreed upon in the contracts mentioned above. For those guarantees and indemnities that do not limit the liability exposure, it may not be able to estimate what the liability would be, until a claim is made for payment or performance, due to the contingent nature of these contracts.
Investments Accounted for by the Equity Method
The Company has investments in eight energy projects accounted for by the equity method, three of which are VIEs, where the Company is not a primary beneficiary, and two of which are owned by a subsidiary that is consolidated as a VIE, as described in Note 5,  Investments Accounted for by the Equity Method and Variable Interest Entities . The equity method of accounting is applied to these investments in affiliates because the ownership structure prevents the Company from exercising a controlling influence over the operating and financial policies of the projects. Under this method, equity in pre-tax income or losses of the investments is reflected as equity in earnings of unconsolidated affiliates.
Sale Leaseback Arrangements
The Company is party to sale-leaseback arrangements that provide for the sale of certain assets to a third party and simultaneous leaseback to the Company. In accordance with ASC 840-40,  Sale-Leaseback Transactions , if the seller-lessee retains, through the leaseback, substantially all of the benefits and risks incident to the ownership of the property sold, the sale-leaseback transaction is accounted for as a financing arrangement. An example of this type of continuing involvement would include an option to repurchase the assets or the buyer-lessor having the option to sell the assets back to the Company. This provision is included in most of the Company’s sale-leaseback arrangements. As such, the Company accounts for these arrangements as financings.
Under the financing method, the Company does not recognize as income any of the sale proceeds received from the lessor that contractually constitutes payment to acquire the assets subject to these arrangements. Instead, the sale proceeds received are accounted for as financing obligations and leaseback payments made by the Company are allocated between interest expense and a reduction to the financing obligation. Interest on the financing obligation is calculated using the Company’s incremental borrowing rate at the inception of the arrangement on the outstanding financing obligation. Judgment is required to determine the appropriate borrowing rate for the arrangement and in determining any gain or loss on the transaction that would be recorded either at the end of or over the lease term.
Business Combinations
The Company accounts for its business combinations in accordance with ASC 805, Business Combinations, or ASC 805. ASC 805 requires an acquirer to recognize and measure in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at fair value at the acquisition date. It also recognizes and measures the goodwill acquired or a gain from a bargain purchase in the business combination and determines what information to disclose to enable users of an entity's financial statements to evaluate the nature and financial effects of the business combination. In addition, transaction costs are expensed as incurred.
Use of Estimates
The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during the reporting period. Actual results could be different from these estimates.
In recording transactions and balances resulting from business operations, the Company uses estimates based on the best information available. Estimates are used for such items as plant depreciable lives, tax provisions, uncollectible accounts, environmental liabilities, acquisition accounting and legal costs incurred in connection with recorded loss contingencies, among others. As better information becomes available or actual amounts are determinable, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.

17

                        

Tax Equity Arrangements
Certain portions of the Company’s noncontrolling interests in subsidiaries represent third-party interests in the net assets under certain tax equity arrangements, which are consolidated by the Company, that have been entered into to finance the cost of wind facilities eligible for certain tax credits. Additionally, certain portions of the Company’s investments in unconsolidated affiliates reflect the Company’s interests in tax equity arrangements, that are not consolidated by the Company, that have been entered into to finance the cost of distributed solar energy systems under operating leases or PPAs eligible for certain tax credits. The Company has determined that the provisions in the contractual agreements of these structures represent substantive profit sharing arrangements. Further, the Company has determined that the appropriate methodology for calculating the noncontrolling interest and investment in unconsolidated affiliates that reflects the substantive profit sharing arrangements is a balance sheet approach utilizing the hypothetical liquidation at book value, or HLBV, method. Under the HLBV method, the amounts reported as noncontrolling interests and investment in unconsolidated affiliates represent the amounts the investors to the tax equity arrangements would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements, assuming the net assets of the funding structures were liquidated at their recorded amounts determined in accordance with U.S. GAAP. The investors’ interests in the results of operations of the funding structures are determined as the difference in noncontrolling interests and investment in unconsolidated affiliates at the start and end of each reporting period, after taking into account any capital transactions between the structures and the funds’ investors. The calculations utilized to apply the HLBV method include estimated calculations of taxable income or losses for each reporting period.

 	 	
Reclassifications
Certain prior-year amounts have been reclassified for comparative purposes.
Recent Accounting Developments
ASU 2016-01 — In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , or ASU No. 2016-01. The amendments of ASU No. 2016-01 eliminate available-for-sale classification of equity investments and require that equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be generally measured at fair value with changes in fair value recognized in net income.  Further, the amendments require that financial assets and financial liabilities to be presented separately in the notes to the financial statements, grouped by measurement category and form of financial asset.  The guidance in ASU No. 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those annual periods. The Company is currently evaluating the impact of the standard on the Company's results of operations, cash flows and financial position.
ASU 2015-17 —In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes , or ASU No. 2015-17. The amendments of ASU No. 2015-17 require that deferred tax liabilities and assets, as well as any related valuation allowance, be presented as noncurrent in a classified statement of financial position. The guidance in ASU No. 2015-17 is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. The amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Early adoption is permitted. The Company adopted the standard for the year ended December 31, 2015, and elected to apply the amendments retrospectively. The adoption did not have any impact on the Company's results of operations, cash flows, or net assets.
ASU 2015-16 — In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments , or ASU No. 2015-16. The amendments of ASU No. 2015-16 require that an acquirer recognize measurement period adjustments to the provisional amounts recognized in a business combination in the reporting period during which the adjustments are determined. Additionally, the amendments of ASU No. 2015-16 require the acquirer to record in the same period's financial statements the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the measurement period adjustment, calculated as if the accounting had been completed at the acquisition date as well as disclosing on either the face of the income statement or in the notes the portion of the amount recorded in current period earnings that would have been recorded in previous reporting periods. The guidance in ASU No. 2015-16 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The amendments should be applied prospectively. The adoption of this standard is not expected to have a material impact on the Company's results of operations, cash flows or financial position.
ASU 2015-03 and ASU 2015-15 — In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , or ASU No. 2015-03. The amendments of ASU No. 2015-03 were issued to reduce complexity in the balance sheet presentation of debt issuance costs. ASU No. 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent

18

                        

with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this standard. Additionally, in August 2015, the FASB issued ASU No. 2015-15,  Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,  or ASU No. 2015-15, as ASU No. 2015-03 did not specifically address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU No. 2015-15 allows an entity to continue to defer and present debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The guidance in ASU No. 2015-03 and ASU No. 2015-15 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The Company adopted ASU No. 2015-03 for the year ended December 31, 2015, which resulted in decreases to other assets and debt of $63 million and $69 million as of December 31, 2015, and December 31, 2014, respectively. The adoption of this standard had no impact on the Company's results of operations, cash flows or net assets.
ASU 2015-02 — In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis , or ASU No. 2015-02. The amendments of ASU No. 2015-02 were issued in an effort to minimize situations under previously existing guidance in which a reporting entity was required to consolidate another legal entity in which that reporting entity did not have: (1) the ability through contractual rights to act primarily on its own behalf; (2) ownership of the majority of the legal entity's voting rights; or (3) the exposure to a majority of the legal entity's economic benefits. ASU No. 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The guidance in ASU No. 2015-02 is effective for periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted the standard effective January 1, 2015 and the adoption of this standard did not impact the Company's results of operations, cash flows or financial position.
ASU 2014-16 - In November 2014, the FASB issued ASU No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity , or ASU No. 2014-16. The amendments of ASU No. 2014-16 clarify how U.S. GAAP should be applied in determining whether the nature of a host contract is more akin to debt or equity and in evaluating whether the economic characteristics and risks of an embedded feature are "clearly and closely related" to its host contract. The guidance in ASU No. 2014-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company adopted the standard effective January 1, 2015 and the adoption of this standard did not impact the Company's results of operations, cash flows or financial position.
ASU 2014-09 - In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU No. 2014-09.  The amendments of ASU No. 2014-09 complete the joint effort between the FASB and the International Accounting Standards Board, or IASB, to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards, or IFRS, and to improve financial reporting.  The guidance in ASU No. 2014-09 provides that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for the goods or services provided and establishes the following steps to be applied by an entity: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies the performance obligation.  In August 2015, the FASB issued ASU 2015-14, which formally deferred the effective date by one year to make the guidance of ASU No. 2014-09 effective for annual reporting periods beginning after December 15, 2017, including interim reports therein. Early adoption is permitted, but not prior to the original effective date, which was for annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of the standard on the Company's results of operations, cash flows and financial position.

Note 3 — Business Acquisitions
2016 Acquisitions
CVSR Drop Down from NRG

On September 1, 2016, the Company acquired the remaining 51.05% interest of CVSR Holdco LLC, which indirectly owns the CVSR solar facility, from NRG, or the CVSR Drop Down, for total cash consideration of $78.5 million, subject to working capital adjustments. The acquisition was funded with cash on hand.
The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50,  Business Combinations - Related Issues . The difference between the cash paid and historical value of the entities' equity was recorded as a contribution from NRG with the offset to noncontrolling interest.

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Because the transaction constituted a transfer of net assets under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Prior to the transaction, the Company recorded its 48.95% interest in CVSR as an equity method investment. In connection with the retrospective adjustment of prior periods, the Company has removed the equity method investment from all prior periods and adjusted its financial statements to reflect its results of operations, financial position and cash flows as if it had consolidated CVSR from the beginning of the financial statement period.

In connection with the acquisition and prior to close of the transaction, a $68 million net receivable resulting from the litigation with SunPower, as described in Note 2,  Summary of Significant Accounting Policies,  was transferred to NRG as a reduction to its ownership interest in the Company.

2015 Acquisitions
November 2015 Drop Down Assets from NRG
On November 3, 2015, the Company acquired 75% of the Class B interests of NRG Wind TE Holdco, or the November 2015 Drop Down Assets, which owns a portfolio of 12 wind facilities totaling 814 net MW, from NRG for cash consideration of $209 million, subject to working capital adjustments. In February 2016, NRG made a final working capital payment of $2 million, reducing total cash consideration to $207 million. The Company is responsible for its pro-rata share of non-recourse project debt of $193 million and noncontrolling interest associated with a tax equity structure of $159 million (as of the acquisition date).
The Company funded the acquisition with borrowings from its revolving credit facility. The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50,  Business Combinations - Related Issues . The difference between the cash paid and historical value of the entities' equity was recorded as a distribution from NRG with the offset to noncontrolling interest. Because the transaction constituted a transfer of net assets under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control.
The Class A interests of NRG Wind TE Holdco are owned by a tax equity investor, or TE Investor, who receives 99% of allocations of taxable income and other items until the flip point, which occurs when the TE Investor obtains a specified return on its initial investment, at which time the allocations to the TE Investor change to 8.53%. The Company generally receives 75% of CAFD until the flip point, at which time the allocations to the Company of CAFD change to 68.60%. If the flip point has not occurred by a specified date, 100% of CAFD is allocated to the TE Investor until the flip point occurs. NRG Wind TE Holdco is a VIE and the Company is the primary beneficiary, through its position as managing member, and consolidates NRG Wind TE Holdco.
The following is a summary of assets and liabilities transferred in connection with the acquisition as of November 3, 2015:

 	NRG Wind TE Holdco	
 	(In millions)	
Current assets	$	30	
 	
Property, plant and equipment	669	
 	
Non-current assets	177	
 	
Total assets	876	

Debt	193	
 	
Other current and non-current liabilities	32	
 	
Total liabilities	225	
 	
Less: noncontrolling interest	282	
 	
Net assets acquired	$	369	

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The following table presents the historical information summary combining the financial information for the November 2015 Drop Down Assets transferred in connection with the acquisition:

 	December 31, 2014	
 	As adjusted (a)	 	NRG Wind TE Holdco	 	As Currently Reported	
 	 	 	 	 	
Current assets	$	762	
 	(b) 	$	66	
 	 	$	828	
 	
Property, plant and equipment	5,300	
 	 	709	
 	 	6,009	
 	
Non-current assets	1,773	
 	(b)(c) 	184	
 	 	1,957	
 	
Total assets	7,835	
 	 	959	
 	 	8,794	

 	 	 	 	 	 	
Debt	5,533	
 	(c) 	198	
 	 	5,731	
 	
Other current and non-current liabilities	310	
 	 	21	
 	 	331	
 	
Total liabilities	5,843	
 	 	219	
 	 	6,062	
 	
Net assets	$	1,992	
 	 	$	740	
 	(d) 	$	2,732	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.
(b)  Retrospectively adjusted to reclassify deferred tax assets in accordance with ASU 2015-17, as further discussed in Note 2, Summary of Significant Accounting Policies.
(c) Retrospectively adjusted to reclassify deferred financing costs in accordance with ASU 2015-03, as further discussed in Note 2, Summary of Significant Accounting Policies.
(d)  Net Assets for NRG Wind TE Holdco as of December 31, 2014, includes noncontrolling interest of $199 million attributable to the TE Investor and $135 million attributable to NRG.

 	Year ended December 31, 2014	
 	As adjusted (a)
	 	NRG Wind TE Holdco	 	As Currently Reported	
 	 	 	 	 	
Total operating revenues	$	771	
 	 	$	57	
 	 	$	828	
 	
Operating income	312	
 	 	(6	)	 	306	
 	
Net income	121	
 	 	(13	)	 	108	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

 	Year ended December 31, 2013	
 	As adjusted (a)	 	NRG Wind TE Holdco	 	As Currently Reported	
 	 	 	 	 	
Total operating revenues	$	426	
 	 	$	8	
 	 	$	434	
 	
Operating income	190	
 	 	(9	)	 	181	
 	
Net income	134	
 	 	(9	)	 	125	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

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Supplemental Pro Forma Information
As described above, the Company's acquisition of the November 2015 Drop Down Assets was accounted for as a transfer of entities under common control. The following unaudited supplemental pro forma information represents the results of operations as if the Company had acquired the November 2015 Drop Down Assets on January 1, 2014, including the impact of acquisition accounting with respect to NRG's acquisition of the projects, all of which were acquired by NRG on April 1, 2014, except for Elbow Creek. All net income or losses prior to the Company's acquisition of the projects is reflected as attributable to NRG and, accordingly, no pro forma impact to earnings per Class A and Class C common share was calculated.

(In millions)	 	For the year ended December 31, 2014	
 	
Operating revenues	 	$	850	
 	
Net income	 	110	
 	
Since the acquisition date, the November 2015 Drop Down Assets contributed $14 million in operating revenues and $1 million in net income.
Desert Sunlight — On June 29, 2015, the Company acquired 25% of the membership interest in Desert Sunlight Investment Holdings, LLC, which owns two solar photovoltaic facilities that total 550 MW, located in Desert Center, California from EFS Desert Sun, LLC, an affiliate of GE Energy Financial Services for a purchase price of $285 million. Power generated by the facilities is sold to Southern California Edison and Pacific Gas and Electric under long-term PPAs with approximately 20 years and 25 years of remaining contract life, respectively. The Company accounts for its 25% investment as an equity method investment.
Spring Canyon — On May 7, 2015, the Company acquired a 90.1% interest in Spring Canyon II, a 32 MW wind facility, and Spring Canyon III, a 28 MW wind facility, each located in Logan County, Colorado, from Invenergy Wind Global LLC. The purchase price was funded with cash on hand. Power generated by Spring Canyon II and Spring Canyon III is sold to Platte River Power Authority under long-term PPAs, each with approximately 24 years of remaining contract life.
University of Bridgeport Fuel Cell— On April 30, 2015, the Company completed the acquisition of the University of Bridgeport Fuel Cell project in Bridgeport, Connecticut from FuelCell Energy, Inc. The project added an additional 1.4 MW of thermal capacity to the Company's portfolio, with a 12-year contract, with the option for a 7-year extension. The acquisition is reflected in the Company's Thermal segment.
January 2015 Drop Down Assets from NRG — On January 2, 2015, the Company acquired the following projects from NRG: (i) Laredo Ridge, an 80 MW wind facility located in Petersburg, Nebraska, (ii) Tapestry, which includes Buffalo Bear, a 19 MW wind facility in Buffalo, Oklahoma; Taloga, a 130 MW wind facility in Putnam, Oklahoma; and Pinnacle, a 55 MW wind facility in Keyser, West Virginia, and (iii)  Walnut Creek, a 485 MW natural gas facility located in City of Industry, California, for total cash consideration of $489 million, including $9 million for working capital, plus assumed project-level debt of $737 million. The Company funded the acquisition with cash on hand and drawings under its revolving credit facility. The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50,  Business Combinations - Related Issues . The difference between the cash paid and the historical value of the entities' equity of $61 million, as well as $23 million of AOCL, was recorded as a distribution to NRG and reduced the balance of its noncontrolling interest. Since the transaction constituted a transfer of assets under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. NRG acquired the majority of EME's assets, including Laredo Ridge, Tapestry and Walnut Creek, on April 1, 2014.

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Supplemental Pro Forma Information
As described above, the Company's acquisition of the January 2015 Drop Down Assets was accounted for as a transfer of entities under common control and all periods were retrospectively adjusted to reflect the entities as if they were transferred on the date the entities were under common control, which was April 1, 2014, the date NRG acquired Walnut Creek, Laredo Ridge and Tapestry. The following unaudited supplemental pro forma information represents the results of operations as if the Company had acquired the January 2015 Drop Down Assets on January 1, 2014, including the impact of acquisition accounting with respect to NRG's acquisition of the projects. While the financial statements have been retrospectively adjusted, all net income or losses prior to the Company's acquisition of the projects is reflected as attributable to NRG and accordingly, no pro forma impact to earnings per Class A and Class C common share was calculated.

(In millions)	 	For the year ended December 31, 2014	
 	
Operating revenues	 	$	854	
 	
Net income	 	101	
 	
Since the acquisition date, the January 2015 Drop Down Assets contributed $144 million in operating revenues and $44 million in net income.
2014 Acquisitions
Alta Wind Portfolio Acquisition — OnAugust 12, 2014, the Company acquired 100% of the membership interests of Alta Wind Asset Management Holdings, LLC, Alta Wind Company, LLC, Alta Wind X Holding Company, LLC and Alta Wind XI Holding Company, LLC, which collectively own seven wind facilities that total 947 MW located in Tehachapi, California, and a portfolio of associated land leases, or the Alta Wind Portfolio. Power generated by the Alta Wind Portfolio is sold to Southern California Edison under long-term PPAs with 21 years of remaining contract life for Alta I-V. The Alta Wind X and XI PPAs began in 2016 with a term of 22 years and sold energy and renewable energy credits on a merchant basis during the years ending December 31, 2014, and 2015.
The purchase price for the Alta Wind Portfolio was $923 million, which consisted of a base purchase price of $870 million, as well as a payment for working capital of $53 million, plus the assumption of $1.6 billion of non-recourse project-level debt. In order to fund the purchase price, the Company completed an equity offering of 12,075,000 shares of its Class A common stock at an offering price of $54.00 per share on July 29, 2014, which resulted in net proceeds of $630 million, after underwriting discounts and expenses. In addition, on August 5, 2014, NRG Yield Operating LLC issued $500 million of Senior Notes, which bear interest at a rate of 5.375% and mature in August 2024.
The acquisition was recorded as a business combination under ASC 805-50, with identifiable assets acquired and liabilities assumed provisionally recorded at their estimated fair values on the acquisition date. The accounting for the business combination was completed as of August 11, 2015, at which point the fair values became final. The following table summarizes the provisional amounts recognized for assets acquired and liabilities assumed as of December 31, 2014, as well as adjustments made through August 11, 2015, when the allocation became final.

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The purchase price of $923 million was allocated as follows:

 	 	Acquisition Date Fair Value at December 31, 2014	 	Measurement period adjustments	 	Revised Acquisition Date	
 	 	(In millions)	
Assets	 	 	 	 	 	 	
Cash	 	$	22	
 	 	$	—	
 	 	$	22	
 	
Current and non-current assets	 	49	
 	 	(2	)	 	47	
 	
Property, plant and equipment	 	1,304	
 	 	6	
 	 	1,310	
 	
Intangible assets	 	1,177	
 	 	(6	)	 	1,171	
 	
Total assets acquired	 	2,552	
 	 	(2	)	 	2,550	

Liabilities	 	 	 	 	 	 	
Debt	 	1,591	
 	 	—	
 	 	1,591	
 	
Current and non-current liabilities	 	38	
 	 	(2	)	 	36	
 	
Total liabilities assumed	 	1,629	
 	 	(2	)	 	1,627	
 	
Net assets acquired	 	$	923	
 	 	$	—	
 	 	$	923	
 	
The Company incurred and expensed acquisition-related transaction costs related to the acquisition of the Alta Wind Portfolio of $2 million for the year ended December 31, 2014.
June 2014 Drop Down Assets —On June 30, 2014, the Company acquired from NRG: (i) El Segundo, a 550 MW fast-start, gas-fired facility located in Los Angeles County, California; (ii) TA High Desert, a 20 MW solar facility located in Los Angeles County, California; and (iii) Kansas South, a 20 MW solar facility located in Kings County, California. The Company paid total cash consideration of $357 million, which represents a base purchase price of $349 million and $8 million of working capital adjustments. In addition, the acquisition included the assumption of $612 million of project-level debt. The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50. The difference between the cash proceeds and the historical value of the net assets was recorded as a distribution to NRG and reduced the balance of its noncontrolling interest. Since the transaction constituted a transfer of entities under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the beginning of the financial statements period or the inception of common control (if later than the beginning of the financial statements period). Accordingly, the Company prepared its consolidated financial statements to reflect the transfer as if it had taken place from the beginning of the financial statements period.
2013 Acquisitions
Energy Systems — On December 31, 2013, NRG Energy Center Omaha Holdings, LLC, an indirect wholly owned subsidiary of NRG Yield LLC, acquired Energy Systems Company, or Energy Systems, for approximately $120 million. The acquisition was financed using cash on hand. Energy Systems is an operator of steam and chilled water thermal facilities that provides heating and cooling services to nonresidential customers in Omaha, Nebraska. The acquisition was recorded as a business combination under ASC 805, with identifiable assets acquired and liabilities assumed recorded at their fair values. The purchase price was primarily allocated to property, plant and equipment of $60 million, customer relationships of $59 million, and $1 million of working capital.

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Note 4 — Property, Plant and Equipment
The Company’s major classes of property, plant, and equipment were as follows:

 	December 31, 2015	 	December 31, 2014	 	Depreciable Lives	
 	(In millions)	 	 	
Facilities and equipment	$	6,480	
 	 	$	6,317	
 	 	2 - 40 Years	
Land and improvements	171	
 	 	170	
 	 	 	
Construction in progress	9	
 	 	9	
 	 	 	
Total property, plant and equipment	6,660	
 	 	6,496	
 	 	 	
Accumulated depreciation	(782	)	 	(487	)	 	 	
Net property, plant and equipment	$	5,878	
 	 	$	6,009	

Note 5 — Investments Accounted for by the Equity Method and Variable Interest Entities
Equity Method Investments
The following table summarizes the Company's equity method investments as of December 31, 2015:

Name	 	Economic Interest	 	Investment Balance	
 	 	 	 	(In millions)	
Desert Sunlight	 	25%	 	291	
GenConn(a)(b)	 	50%	 	110	
Elkhorn Ridge(c)	 	50.3%	 	96	
San Juan Mesa(c)	 	56.3%	 	80	
NRG DGPV Holdco 1 LLC(d)	 	95%	 	71	
NRG RPV Holdco 1 LLC(e)	 	95%	 	58	
Avenal(b)	 	50%	 	(9)	

 	
 	
(a)  GenConn is a variable interest entity.
(b)  The Company's interest in GenConn and Avenal increased from 49.95% to 50% on September 30, 2015.
(c) San Juan Mesa and Elkhorn Ridge are part of the TE Wind Holdco tax equity structure, as described below. San Juan Mesa and Elkhorn Ridge are owned 75% and 66.7%, respectively, by TE Wind Holdco. The Company owns 75% of the Class B interests in TE Wind Holdco.
(d)  NRG DGPV Holdco 1 LLC is a tax equity structure and is a VIE. The related allocations are described below.
(e) NRG RPV Holdco 1 LLC is a tax equity structure and is a VIE. The related allocations are described below.

As of December 31, 2015 the Company had no undistributed earnings from its equity method investments. As of December 31, 2014, the Company had $10 million of undistributed earnings from its equity method investments.
The Company acquired its interest in Desert Sunlight on June 30, 2015, for $285 million, which resulted in a difference between the purchase price and the basis of the acquired assets and liabilities of $171 million. The difference is attributable to the fair value of the property, plant and equipment and power purchase agreements. The Company is amortizing the related basis difference to equity in earnings (losses) over the related useful life of the underlying assets acquired.
Non-recourse project-level debt of unconsolidated affiliates
The Company's pro-rata share of non-recourse debt held by unconsolidated affiliates was approximately $454 million as of December 31, 2015.

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Avenal — The Company owns a 50% equity interest in Avenal, which consists of three solar PV projects in Kings County, California totaling approximately 45 MWs. Eurus Energy owns the remaining 50% of Avenal. Power generated by the projects is sold under a 20-year PPA. On September 22, 2010, Avenal entered into a $35 million promissory note facility with the Company. Amounts drawn under the promissory note facility accrue interest at 4.5% per annum. Also, on September 22, 2010, Avenal entered into a $209 million financing arrangement with a syndicate of banks, or the Avenal Facility. As of December 31, 2015, and 2014, Avenal had outstanding $143 million and $107 million, respectively, under the Avenal Facility.
GenConn — GenConn has a $237 million project note with an interest rate of 4.73% and a maturity date of July 2041 and a 5-year, $35 million working capital facility that matures in 2018 which can be used to issue letters of credit at an interest rate of 1.875% per annum. As of December 31, 2015, $220 million was outstanding under the note and $14 million was drawn on the working capital facility. The note is secured by all of the GenConn assets.
In March 2015, GenConn entered into a settlement agreement relating to a lawsuit it filed against the electrical contractor responsible for the design and installation of the 5X and 6X circuits at the GenConn Middletown facility and one of its subcontractors. The results of the settlement agreement are not expected to have a material impact on the Company's results of operations, cash flows or financial position.
Desert Sunlight —Desert Sunlight 250 and Desert Sunlight 300 each entered into three distinct tranches of debt. As of December 31, 2015, and 2014, Desert Sunlight had total debt outstanding of $1.1 billion and $1.5 billion, respectively, under the three tranches.
The following tables present summarized financial information for the Company's significant equity method investments:

 	Year Ended December 31,	
 	2015	 	2014	 	2013	
Income Statement Data:	(In millions)	
GenConn	 	 	 	 	 	
Operating revenues	78	
 	 	82	
 	 	80	
 	
Operating income	40	
 	 	40	
 	 	44	
 	
Net income	28	
 	 	28	
 	 	31	
 	
Desert Sunlight	 	 	 	 	 	
Operating revenues	206	
 	 	 	 	 	
Operating income	124	
 	 	 	 	 	
Net income	73	

 	 	 	As of December 31,	
 	 	 	2015	 	2014	
Balance Sheet Data:	 	 	(In millions)	
GenConn	 	 	 	 	
Current assets	 	36	
 	 	33	
 	
Non-current assets	 	416	
 	 	438	
 	
Current liabilities	 	16	
 	 	20	
 	
Non-current liabilities	 	215	
 	 	223	
 	
Desert Sunlight	 	 	 	 	
Current assets	 	310	
 	 	 	
Non-current assets	 	1,435	
 	 	 	
Current liabilities	 	82	
 	 	 	
Non-current liabilities	 	1,086	

26

                        

Variable Interest Entities, or VIEs
Entities that are Consolidated
NRG Wind TE Holdco — On November 3, 2015, the Company acquired 75% of the Class B interests of NRG Wind TE Holdco, or the November 2015 Drop Down Assets, which owns a portfolio of 12 wind facilities totaling 814 net MW, from NRG for total cash consideration of $209 million, as described in Note 3,  Business Acquisitions . In February 2016, NRG made a final working capital payment of $2 million, reducing total cash consideration to $207 million. NRG retained a 25% ownership of the Class B interest. The Class A interests of NRG Wind TE Holdco are owned by a tax equity investor, or TE Investor, who receives 99% of allocations of taxable income and other items until the flip point, which occurs when the TE Investor obtains a specified return on its initial investment, at which time the allocations to the TE Investor change to 8.53%. The Company generally receives 75% of CAFD until the flip point, at which time the allocations to the Company of CAFD change to 68.60%. If the flip point has not occurred by a specified date, 100% of CAFD is allocated to the TE Investor until the flip point occurs. NRG Wind TE Holdco is a VIE and the Company is the primary beneficiary, through its position as managing member, and consolidates NRG Wind TE Holdco. The Company utilizes the HLBV method to determine the net income or loss allocated to the TE Investor noncontrolling interest. Net income or loss attributable to the Class B interests is allocated to NRG's noncontrolling interest based on its 25% ownership interest.
Alta TE Holdco — On June 30, 2015, the Company sold an economic interest in Alta TE Holdco to a financial institution in order to monetize certain cash and tax attributes, primarily PTCs. The financial institution, or Alta Investor, receives 99% of allocations of taxable income and other items until the flip point, which occurs when the Alta Investor obtains a specified return on its initial investment, at which time the allocations to the Alta Investor change to 5%. The Company received 100% of CAFD through December 31, 2015, and subsequently will receive 94.34% until the flip point, at which time the allocations to the Company of CAFD will change to 97.12%, unless the flip point will not have occurred by a specified date, which would result in 100% of CAFD allocated to the Alta Investor until the flip point occurs. Alta TE Holdco is a VIE and the Company is the primary beneficiary through its position as managing member, and therefore consolidates Alta TE Holdco, with the Alta Investor's interest shown as noncontrolling interest. The Company utilizes the HLBV method to determine the net income or loss allocated to the noncontrolling interest. The net proceeds of $119 million are reflected as noncontrolling interest in the Company's balance sheet.
Spring Canyon — On May 7, 2015, the Company acquired a 90.1% of the Class B interests in Spring Canyon II, a 32 MW wind facility, and Spring Canyon III, a 28 MW wind facility, each located in Logan County, Colorado, from Invenergy Wind Global LLC. Invenergy owns 9.9% of the Class B interests. Prior to the acquisition date, the projects were financed with a partnership flip tax-equity structure with a financial institution, who owns the Class A interests, to monetize certain cash and tax attributes, primarily PTCs. Until the flip point, the Class A member will receive 34.81% of the cash distributions based on the projects’ production level and the Company and Invenergy will receive 65.19%. After the flip point, cash distributions are allocated 5% to the Class A member and 95% to the Company and Invenergy. Spring Canyon is a VIE and the Company is the primary beneficiary through its position as managing member, and therefore consolidates Spring Canyon. The Class A member and Invenergy's interests are shown as noncontrolling interest. The Company utilizes the HLBV method to determine the net income or loss allocated to the Class A member. Net Income or loss attributable to the Class B interests is allocated to Invenergy's noncontrolling interest based on its 9.9% ownership interest.
Summarized financial information for the Company's consolidated VIEs consisted of the following as of December 31, 2015:

(In millions)	NRG TE Wind Holdco	 	Alta Wind TE Holdco	 	Spring Canyon	
Other current and non-current assets	$	204	
 	 	$	18	
 	 	$	3	
 	
Property, plant and equipment	663	
 	 	484	
 	 	104	
 	
Intangible assets	2	
 	 	287	
 	 	—	
 	
Total assets	869	
 	 	789	
 	 	107	
 	
Current and non-current liabilities	220	
 	 	10	
 	 	5	
 	
Total liabilities	220	
 	 	10	
 	 	5	
 	
Noncontrolling interest	268	
 	 	121	
 	 	70	
 	
Net assets less noncontrolling interests	$	381	
 	 	$	658	
 	 	$	32	

27

                        

Entities that are not Consolidated
The Company has interests in entities that are considered VIEs under ASC 810, Consolidation, but for which it is not considered the primary beneficiary.  The Company accounts for its interests in these entities under the equity method of accounting.
NRG DGPV Holdco 1 LLC — On May 8, 2015, NRG Yield DGPV Holding LLC, a subsidiary of the Company and NRG Renew DG Holdings LLC, a subsidiary of NRG, entered into a partnership by forming NRG DGPV Holdco 1 LLC, or DGPV Holdco 1, the purpose of which is to own or purchase solar power generation projects and other ancillary related assets from NRG Renew DG Holdings LLC, via intermediate funds, including: (i) a tax equity-financed portfolio of 10 recently completed community solar projects representing approximately 8 MW with a weighted average remaining PPA term of 20 years; and (ii) a tax equity-financed portfolio of approximately 12 commercial photovoltaic systems representing approximately 37 MW with a weighted average remaining PPA term of 19 years. The following illustrates the structure of DGPV Holdco:

As of December 31, 2015, the Company's investment in DGPV Holdco 1 related to the recently completed community solar projects was $17 million. Additionally, as of December 31, 2015, the Company's investment in DGPV Holdco 1 related to the commercial photovoltaic systems was $55 million, $44 million of which remained payable and is recorded in accounts payable — affiliate on the consolidated balance sheet at December 31, 2015. Both of these investments relate to the Company's $100 million commitment to distributed solar projects in partnership with NRG. The Company's maximum exposure to loss is limited to its equity investment.
NRG DGPV Holdco 2 LLC — On February 29, 2016,the Company and NRG entered into an additional partnership by forming NRG DGPV Holdco 2 LLC, or DGPV Holdco 2, to own or purchase solar power generation projects and other ancillary related assets from NRG Renew LLC or its subsidiaries, via intermediate funds.  Under this partnership, the Company committed to fund up to $50 million of capital. 
NRG RPV Holdco 1 LLC — On April 9, 2015, NRG Yield RPV Holding LLC, a subsidiary of the Company and NRG Residential Solar Solutions LLC, a subsidiary of NRG, entered into a partnership by forming NRG RPV Holdco 1 LLC, or RPV Holdco, that will invest in and hold operating portfolios of residential solar assets developed by NRG Home Solar, a subsidiary of NRG, including: (i) an existing, unlevered portfolio of over 2,200 leases across nine states representing approximately 17 MW with a weighted average remaining lease term of approximately 17 years; and (ii) a tax equity-financed portfolio of approximately 5,700 leases representing approximately 40 MW, with an average lease term for the existing and new leases of approximately 17 to 20 years. The following illustrates the structure of RPV Holdco:

28

                        

The Company invested $26 million in RPV Holdco in April 2015 related to the existing, unlevered portfolio of leases. The Company also invested $36 million of its $150 million commitment in the tax equity-financed portfolio through December 31, 2015. The Company's maximum exposure to loss is limited to its equity investment.
On February 29, 2016, the Company and NRG amended the RPV Holdco partnership to reduce the aggregate commitment of $150 million to $100 million in connection with the formation of DGPV Holdco 2. 
On August 5, 2016, the Company and NRG amended the RPV Holdco partnership to further reduce the aggregate commitment of $100 million to $60 million in connection with NRG’s change in business model approach in the residential solar business.

Note 6 — Fair Value of Financial Instruments
For cash and cash equivalents, restricted cash, accounts receivable — affiliate, accounts receivable accounts payable, accounts payable — affiliate, accrued expenses and other liabilities, the carrying amount approximates fair value because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.
The estimated carrying amounts and fair values of the Company’s recorded financial instruments not carried at fair market value are as follows:

 	As of December 31, 2015	 	As of December 31, 2014	
 	Carrying Amount	 	Fair Value	 	Carrying Amount	 	Fair Value	
 	(In millions)	
Assets:	 	 	 	 	 	 	 	
Notes receivable, including current portion	47	
 	 	47	
 	 	61	
 	 	61	
 	
Liabilities:	 	 	 	 	 	 	 	
Long-term debt, including current portion	5,656	
 	 	5,538	
 	 	5,800	
 	 	5,886	
 	
The fair value of notes receivable and long-term debt are based on expected future cash flows discounted at market interest rates, or current interest rates for similar instruments and are classified as Level 3 within the fair value hierarchy.

29

                        

Fair Value Accounting under ASC 820
ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
 	 	
•	Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.	
 	 	
•	Level 2—inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.	
 	 	
•	Level 3—unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.	
In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement.
Recurring Fair Value Measurements
The Company records its derivative assets and liabilities at fair market value on its consolidated balance sheet. There were no asset positions as of December 31, 2015. The following table presents assets and liabilities measured and recorded at fair value on the Company's consolidated balance sheets on a recurring basis and their level within the fair value hierarchy:

 	As of December 31, 2015	 	As of December 31, 2014	
 	Fair Value (a)	 	Fair Value (a)	
(In millions)	Level 2	 	Level 2	
Derivative assets:	 	 	 	
Commodity contracts	$	—	
 	 	$	2	
 	
Interest rate contracts	—	
 	 	2	
 	
Total assets	$	—	
 	 	4	
 	
Derivative liabilities:	 	 	 	
Commodity contracts	$	2	
 	 	3	
 	
Interest rate contracts	98	
 	 	126	
 	
Total liabilities	$	100	
 	 	$	129	

 	

(a)  There were no assets or liabilities classified as Level 1 or Level 3 as of December 31, 2015, and 2014.
Derivative Fair Value Measurements
The Company's contracts are non-exchange-traded and valued using prices provided by external sources. For the Company’s energy markets, management receives quotes from multiple sources. To the extent that multiple quotes are received, the prices reflect the average of the bid-ask mid-point prices obtained from all sources believed to provide the most liquid market for the commodity.
The fair value of each contract is discounted using a risk free interest rate. In addition, a credit reserve is applied to reflect credit risk, which for interest rate swaps, is calculated based on credit default swaps utilizing the bilateral method. For commodities, to the extent that NRG's net exposure under a specific master agreement is an asset, the Company uses the counterparty's default swap rate. If the exposure under a specific master agreement is a liability, the Company uses NRG's default swap rate. For interest rate swaps and commodities, the credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the liabilities or that a market participant would be willing to pay for the assets. As of December 31, 2015, the credit reserve resulted in a $1 million increase in fair value which is a gain in OCI. It is possible that future market prices could vary from those used in recording assets and liabilities and such variations could be material.

30

                        

Concentration of Credit Risk
In addition to the credit risk discussion as disclosed in Note 2, Summary of Significant Accounting Policies, the following item is a discussion of the concentration of credit risk for the Company's financial instruments. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. The Company monitors and manages credit risk through credit policies that include: (i) an established credit approval process; (ii) daily monitoring of counterparties' credit limits; (iii) the use of credit mitigation measures such as margin, collateral, prepayment arrangements, or volumetric limits; (iv) the use of payment netting agreements; and (v) the use of master netting agreements that allow for the netting of positive and negative exposures of various contracts associated with a single counterparty. Risks surrounding counterparty performance and credit could ultimately impact the amount and timing of expected cash flows. The Company seeks to mitigate counterparty risk by having a diversified portfolio of counterparties.
Counterparty credit exposure includes credit risk exposure under certain long-term agreements, including solar and other PPAs. As external sources or observable market quotes are not available to estimate such exposure, the Company estimates the exposure related to these contracts based on various techniques including but not limited to internal models based on a fundamental analysis of the market and extrapolation of observable market data with similar characteristics. Based on these valuation techniques, as of December 31, 2015, credit risk exposure to these counterparties attributable to the Company's ownership interests was approximately $2.8 billion for the next five years. The majority of these power contracts are with utilities with strong credit quality and public utility commission or other regulatory support, as further described in Note 12, Segment Reporting.  However, such regulated utility counterparties can be impacted by changes in government regulations, which the Company is unable to predict.

Note 7 — Accounting for Derivative Instruments and Hedging Activities
ASC 815 requires the Company to recognize all derivative instruments on the balance sheet as either assets or liabilities and to measure them at fair value each reporting period unless they qualify for a NPNS exception. The Company may elect to designate certain derivatives as cash flow hedges, if certain conditions are met, and defer the effective portion of the change in fair value of the derivatives to accumulated OCI, until the hedged transactions occur and are recognized in earnings. The ineffective portion of a cash flow hedge is immediately recognized in earnings. For derivatives that are not designated as cash flow hedges or do not qualify for hedge accounting treatment, the changes in the fair value will be immediately recognized in earnings. Certain derivative instruments may qualify for the NPNS exception and are therefore exempt from fair value accounting treatment. ASC 815 applies to the Company's energy related commodity contracts and interest rate swaps.
Energy-Related Commodities
To manage the commodity price risk associated with its competitive supply activities and the price risk associated with wholesale power sales, the Company may enter into derivative hedging instruments, namely, forward contracts that commit the Company to sell energy commodities or purchase fuels in the future. The objectives for entering into derivatives contracts designated as hedges include fixing the price for a portion of anticipated future electricity sales and fixing the price of a portion of anticipated fuel purchases for the operation of its subsidiaries. As of December 31, 2015, the Company had forward contracts for the purchase of fuel commodities relating to the forecasted usage of the Company’s district energy centers extending through 2018. At December 31, 2015, these contracts were not designated as cash flow or fair value hedges.
Also, as of December 31, 2015, the Company had other energy-related contracts that did not meet the definition of a derivative instrument or qualified for the NPNS exception and were therefore exempt from fair value accounting treatment as follows:
 	 	
•	Power tolling contracts through 2039, and	
 	 	
•	Natural gas transportation contracts through 2028.	
Interest Rate Swaps
The Company is exposed to changes in interest rates through the issuance of variable rate debt. In order to manage interest rate risk, it enters into interest rate swap agreements.
As of December 31, 2015, the Company had interest rate derivative instruments on non-recourse debt extending through 2031, most of which are designated as cash flow hedges.

31

                        

Volumetric Underlying Derivative Transactions
The following table summarizes the net notional volume buy/(sell) of the Company's open derivative transactions broken out by commodity as of December 31, 2015, and 2014:

 	 	 	Total Volume	
 	 	 	December 31, 2015	 	December 31, 2014	
Commodity	Units	 	(In millions)	
Natural Gas	MMBtu	 	4	
 	 	2	
 	
Interest	Dollars	 	$	1,991	
 	 	$	3,059	
 	
The decrease in the interest rate position is primarily the result of settling the Alta X and Alta XI interest rate swaps in connection with the repayment of the outstanding project-level debt during the second quarter of 2015, as further described in Note 9,  Long-term Debt .
Fair Value of Derivative Instruments
There were no derivative asset positions on the balance sheet as of December 31, 2015. The following table summarizes the fair value within the derivative instrument valuation on the balance sheet:

 	Fair Value	
 	Derivative Assets	 	Derivative Liabilities	
 	December 31, 2014	 	December 31, 2015	 	December 31, 2014	
 	(In millions)	
Derivatives Designated as Cash Flow Hedges:	 	 	 	 	 	
Interest rate contracts current	$	—	
 	 	$	34	
 	 	$	44	
 	
Interest rate contracts long-term	2	
 	 	56	
 	 	57	
 	
Total Derivatives Designated as Cash Flow Hedges	2	
 	 	90	
 	 	101	
 	
Derivatives Not Designated as Cash Flow Hedges:	 	 	 	 	 	
Interest rate contracts current	—	
 	 	3	
 	 	5	
 	
Interest rate contracts long-term	—	
 	 	5	
 	 	20	
 	
Commodity contracts current	2	
 	 	2	
 	 	3	
 	
Total Derivatives Not Designated as Cash Flow Hedges	2	
 	 	10	
 	 	28	
 	
Total Derivatives	$	4	
 	 	$	100	
 	 	$	129	
 	
The Company has elected to present derivative assets and liabilities on the balance sheet on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. As of December 31, 2015, there were no offsetting amounts at the counterparty master agreement level or outstanding collateral paid or received. As of December 31, 2014, there was no outstanding collateral paid or received. The following table summarizes the offsetting of derivatives by counterparty master agreement level as of December 31, 2014:

 	

 	 	 	 	 	 	 	 	 	 	 	 	
 	Gross Amounts Not Offset in the Statement of Financial Position	
As of December 31, 2014	Gross Amounts of Recognized Assets/Liabilities	 	Derivative Instruments	 	Net Amount	
Commodity contracts:	(In millions)	
Derivative assets	$	2	
 	 	$	—	
 	 	$	2	
 	
Derivative liabilities	(3	)	 	—	
 	 	(3	)	
Total commodity contracts	(1	)	 	—	
 	 	(1	)	
Interest rate contracts:	 	 	 	 	 	
Derivative assets	2	
 	 	(2	)	 	—	
 	
Derivative liabilities	(126	)	 	2	
 	 	(124	)	
Total interest rate contracts	(124	)	 	—	
 	 	(124	)	
Total derivative instruments	$	(125	)	 	$	—	
 	 	$	(125	)	

32

                        

Accumulated Other Comprehensive Loss
The following table summarizes the effects on the Company’s accumulated OCL balance attributable to interest rate swaps designated as cash flow hedge derivatives, net of tax:

 	Year ended December 31,	
 	2015	 	2014	 	2013	
 	(In millions)	
Accumulated OCL beginning balance	$	(76	)	 	$	(16	)	 	$	(68	)	
Reclassified from accumulated OCL to income due to realization of previously deferred amounts	14	
 	 	14	
 	 	14	
 	
Mark-to-market of cash flow hedge accounting contracts	(21	)	 	(74	)	 	38	
 	
Accumulated OCL ending balance, net of income tax benefit of $16, $6 and $1, respectively	$	(83	)	 	$	(76	)	 	$	(16	)	
Accumulated OCL attributable to noncontrolling interests	(56	)	 	(67	)	 	(16	)	
Accumulated OCL attributable to NRG Yield, Inc.	$	(27	)	 	$	(9	)	 	$	—	
 	
Losses expected to be realized from OCL during the next 12 months, net of income tax benefit of $3	$	14	

 	 	

Amounts reclassified from accumulated OCL into income and amounts recognized in income from the ineffective portion of cash flow hedges are recorded to interest expense. There was no ineffectiveness for the years ended December 31, 2015, 2014 and 2013.
Impact of Derivative Instruments on the Statements of Operations
The Company has interest rate derivative instruments that are not designated as cash flow hedges. The effect of interest rate hedges is recorded to interest expense. For the years ended December 31, 2015, and 2014, the impact to the consolidated statements of operations was a gain of $16 million and a loss of $22 million, respectively.

A portion of the Company’s derivative commodity contracts relates to its Thermal Business for the purchase of fuel commodities based on the forecasted usage of the thermal district energy centers. Realized gains and losses on these contracts are reflected in the fuel costs that are permitted to be billed to customers through the related customer contracts or tariffs and, accordingly, no gains or losses are reflected in the consolidated statements of operations for these contracts.
Commodity contracts also hedge the forecasted sale of power for the Elbow Creek wind facility. The effect of these commodity hedges is recorded to operating revenues. For the years ended December 31, 2015, and 2014, the impact to the consolidated statements of operations was an unrealized loss of $2 million and gain of $2 million respectively.
See Note 6, Fair Value of Financial Instruments, for discussion regarding concentration of credit risk.

Note 8 — Intangible Assets
Intangible Assets — The Company's intangible assets as of December 31, 2015, and 2014 primarily reflect intangible assets established from its business acquisitions and are comprised of the following:
 	 	
•	Emission Allowances —These intangibles primarily consist of SO2 and NOx emission allowances established with the El Segundo and Walnut Creek acquisitions. These emission allowances are held-for-use and are amortized to cost of operations, with NO x  allowances amortized on a straight-line basis and SO 2  allowances amortized based on units of production.	
 	 	
•	Development rights — Arising primarily from the acquisition of solar businesses in 2010 and 2011, these intangibles are amortized to depreciation and amortization expense on a straight-line basis over the estimated life of the related project portfolio.	
 	 	
•	Customer contracts — Established with the acquisition of NRG Energy Center Phoenix,these intangibles represent the fair value at the acquisition date of contracts that primarily provide chilled water, steam and electricity to its customers. These contracts are amortized to revenues based on expected volumes. 	
 	 	
•	Customer relationships — Established with the acquisition of NRG Energy Center Phoenix and NRG Energy Systems, these intangibles represent the fair value at the acquisition date of the businesses' customer base. The customer	

33

                        

relationships are amortized to depreciation and amortization expense based on the expected discounted future net cash flows by year. 
 	 	
•	PPAs — Established predominantly with the acquisitions of the Alta Wind Portfolio, Walnut Creek, Tapestry and Laredo Ridge, these represent the fair value of the PPAs acquired. These will be amortized, generally on a straight-line basis, over the term of the PPA.  	
 	 	
•	Leasehold Rights —Established with the acquisition of the Alta Wind Portfolio, this represents the fair value of contractual rights to receive royalty payments equal to a percentage of PPA revenue from certain projects. These will be amortized on a straight-line basis. 	
 	 	
•	Other — Consists of the acquisition date fair value of the contractual rights to a ground lease for South Trent and to utilize certain interconnection facilities for Blythe, as well as land rights acquired in connection with the acquisition of Elbow Creek. 	
The following tables summarize the components of intangible assets subject to amortization:

Year ended December 31, 2015	Emission Allowances	 	Development
Rights	 	Customer Contracts	 	Customer
Relationships	 	PPAs	 	Leasehold Rights	 	Other	 	Total	
 	 	 	(In millions)	
January 1, 2015	$	16	
 	 	$	4	
 	 	$	15	
 	 	$	66	
 	 	$	1,269	
 	 	$	86	
 	 	$	6	
 	 	$	1,462	
 	
Other	(1	)	 	—	
 	 	—	
 	 	—	
 	 	(6	)	 	—	
 	 	—	
 	 	(7	)	
December 31, 2015	15	
 	 	4	
 	 	15	
 	 	66	
 	 	1,263	
 	 	86	
 	 	6	
 	 	1,455	
 	
Less accumulated amortization	(1	)	 	(1	)	 	(6	)	 	(3	)	 	(75	)	 	(5	)	 	(2	)	 	(93	)	
Net carrying amount	$	14	
 	 	$	3	
 	 	$	9	
 	 	$	63	
 	 	$	1,188	
 	 	$	81	
 	 	$	4	
 	 	$	1,362	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Year ended December 31, 2014	Emission
Allowances	 	Development Rights	 	Customer Contracts	 	Customer Relationships	 	PPAs	 	Leasehold Rights	 	Other	 	Total	
 	(In millions)	
January 1, 2014	$	8	
 	 	$	4	
 	 	$	15	
 	 	$	66	
 	 	$	14	
 	 	$	—	
 	 	$	6	
 	 	$	113	
 	
Acquisition of Alta Wind Portfolio	—	
 	 	—	
 	 	—	
 	 	—	
 	 	1,092	
 	 	86	
 	 	—	
 	 	1,178	
 	
Transfer of January 2015 Drop Down Assets	7	
 	 	—	
 	 	—	
 	 	—	
 	 	160	
 	 	—	
 	 	—	
 	 	167	
 	
Other	1	
 	 	—	
 	 	—	
 	 	—	
 	 	3	
 	 	—	
 	 	—	
 	 	4	
 	
December 31, 2014	16	
 	 	4	
 	 	15	
 	 	66	
 	 	1,269	
 	 	86	
 	 	6	
 	 	1,462	
 	
Less accumulated amortization	—	
 	 	(1	)	 	(5	)	 	(2	)	 	(26	)	 	(2	)	 	(2	)	 	(38	)	
Net carrying amount	$	16	
 	 	$	3	
 	 	$	10	
 	 	$	64	
 	 	$	1,243	
 	 	$	84	
 	 	$	4	
 	 	$	1,424	
 	
The Company recorded amortization of $55 million, $30 million and $4 million during the years ended December 31, 2015, 2014 and 2013. Of these amounts, $54 million and $29 million for the years ended December 31, 2015, and 2014, respectively, were recorded as contra-revenue. The following table presents estimated amortization of the Company's intangible assets for each of the next five years:

Year Ended December 31,	 	Total	
 	 	(In millions)	
2016	 	$	70	
 	
2017	 	70	
 	
2018	 	71	
 	
2019	 	71	
 	
2020	 	71	
 	
The weighted average amortization period related to the intangibles acquired in the year ended December 31, 2015 was 18 years for other intangible assets.
Out-of-market contracts — The out-of-market contract liability represents the out-of-market value of the PPA for the Blythe solar project and Spring Canyon wind projects and the out-of-market value of the land lease for Alta Wind XI Holding Company, LLC, as of their respective acquisition dates. The Blythe solar project's liability of $5 million is recorded to other non-current liabilities and is amortized to revenue on a units-of-production basis over the twenty-year term of the agreement. Spring Canyon's liability of $3 million is recorded to other non-current liabilities and is amortized to revenue on a straight-line basis over the twenty-five year term of the agreement. The Alta Wind XI Holding Company, LLC's liability of $5 million is recorded to other non-current

34

                        

liabilities and is amortized to cost of operations on a straight-line basis over the term of the land lease. At December 31, 2015, accumulated amortization of out-of-market contracts was $3 million and amortization expense was $1 million for the year ended December 31, 2015.
Note 9 — Long-term Debt
The Company's borrowings, including short term and long term portions consisted of the following:

 	December 31, 2015	 	December 31, 2014	 	Interest rate % (a)	 	Letters of Credit Outstanding at December 31, 2015	
 	(In millions, except rates)	 	 	
Convertible Notes, due 2020 (b)	$	266	
 	 	$	—	
 	 	3.25	 	 	
Convertible Notes, due 2019 (c)	330	
 	 	326	
 	 	3.5	 	 	
Senior Notes, due 2024	500	
 	 	500	
 	 	5.375	 	 	
NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility, due 2019  (d)	306	
 	 	—	
 	 	L+2.75	 	$	56	
 	
Project-level debt:	 	 	 	 	 	 	 	
Alpine, due 2022	154	
 	 	163	
 	 	L+1.75	 	37	
 	
Alta Wind I, lease financing arrangement, due 2034	252	
 	 	261	
 	 	7.015	 	16	
 	
Alta Wind II, lease financing arrangement, due 2034	198	
 	 	205	
 	 	5.696	 	28	
 	
Alta Wind III, lease financing arrangement, due 2034	206	
 	 	212	
 	 	6.067	 	28	
 	
Alta Wind IV, lease financing arrangement, due 2034	133	
 	 	138	
 	 	5.938	 	19	
 	
Alta Wind V, lease financing arrangement, due 2035	213	
 	 	220	
 	 	6.071	 	31	
 	
Alta Wind X, due 2021	—	
 	 	300	
 	 	L+2.00	 	—	
 	
Alta Wind XI, due 2021	—	
 	 	191	
 	 	L+2.00	 	—	
 	
Alta Realty Investments, due 2031	33	
 	 	34	
 	 	7.00	 	—	
 	
Alta Wind Asset Management, due 2031	19	
 	 	20	
 	 	L+2.375	 	—	
 	
Avra Valley, due 2031	60	
 	 	63	
 	 	L+1.75	 	3	
 	
Blythe, due 2028	21	
 	 	22	
 	 	L+1.625	 	6	
 	
Borrego, due 2025 and 2038	72	
 	 	75	
 	 	L+ 2.50/5.65	 	5	
 	
CVSR, due 2037	793	
 	 	815	
 	 	2.339 - 3.775	 	—	
 	
El Segundo Energy Center, due 2023	485	
 	 	506	
 	 	L+1.625 - L+2.25	 	82	
 	
Energy Center Minneapolis, due 2017 and 2025	108	
 	 	121	
 	 	5.95 -7.25	 	—	
 	
Kansas South, due 2031	33	
 	 	35	
 	 	L+2.00	 	4	
 	
Laredo Ridge, due 2028	104	
 	 	108	
 	 	L+1.875	 	10	
 	
Marsh Landing, due 2017 and 2023	418	
 	 	464	
 	 	L+1.75 - L+1.875	 	22	
 	
PFMG and related subsidiaries financing agreement, due 2030	29	
 	 	31	
 	 	6.00	 	—	
 	
Roadrunner, due 2031	40	
 	 	42	
 	 	L+1.625	 	5	
 	
South Trent Wind, due 2020	62	
 	 	65	
 	 	L+1.625	 	10	
 	
TA High Desert, due 2020 and 2032	52	
 	 	55	
 	 	L+2.50/5.15	 	8	
 	
Tapestry Wind, due 2021	181	
 	 	192	
 	 	L+1.625	 	20	
 	
Viento, due 2023	189	
 	 	196	
 	 	L+2.75	 	27	
 	
Walnut Creek, due 2023	351	
 	 	391	
 	 	L+1.625	 	41	
 	
WCEP Holdings, due 2023	46	
 	 	46	
 	 	L+3.00	 	—	
 	
Other	2	
 	 	3	
 	 	various	 	—	
 	
Subtotal project-level debt:	4,254	
 	 	4,974	
 	 	 	 	 	
Total debt	5,656	
 	 	5,800	
 	 	 	 	 	
Less current maturities	264	
 	 	245	
 	 	 	 	 	
Less deferred financing costs (e)	63	
 	 	69	
 	 	 	 	 	
Total long-term debt	$	5,329	
 	 	$	5,486	

 	

35

                        

(a)  As of December 31, 2015, L+ equals 3 month LIBOR plus x%, except for the NRG Marsh Landing term loan, Walnut Creek term loan, and NRG Yield LLC and Yield operating LLC Revolving Credit Facility where L+ equals 1 month LIBOR plus x% and Kansas South where L+ equals 6 month LIBOR plus x%.
(b)  Net of discount of $21 million as of December 31, 2015.
(c)  Net of discount of $15 million and $19 million as of December 31, 2015, and December 31, 2014, respectively.
(d)  Applicable rate is determined by the Borrower Leverage Ratio, as defined in the credit agreement.
(e)  Total net debt reflects the reclassification of deferred financing costs to reduce long-term debt as further described in Note 2, Summary of Significant Accounting Policies .
The financing arrangements listed above contain certain covenants, including financial covenants that the Company is required to be in compliance with during the term of the arrangement. As of December 31, 2015, the Company was in compliance with all of the required covenants.
The Company's pro-rata share of non-recourse debt held by unconsolidated affiliates was approximately $454 million as of December 31, 2015.
2020 Convertible Senior Notes
On June 29, 2015, the Company closed on its offering of $287.5 million aggregate principal amount of 3.25% Convertible Senior Notes due 2020, or the 2020 Convertible Notes.  The 2020 Convertible Notes are convertible, under certain circumstances, into the Company’s Class C common stock, cash or a combination thereof at an initial conversion price of $27.50 per Class C common share, which is equivalent to an initial conversion rate of approximately 36.3636 shares of Class C common stock per $1,000 principal amount of notes. Interest on the 2020 Convertible Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2015. The 2020 Convertible Notes mature on June 1, 2020, unless earlier repurchased or converted in accordance with their terms. Prior to the close of business on the business day immediately preceding December 1, 2019, the 2020 Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The 2020 Convertible Notes are guaranteed by NRG Yield Operating LLC and NRG Yield LLC.
The 2020 Convertible Notes are accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options. Under ASC 470-20, issuers of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, are required to separately account for the liability (debt) and equity (conversion option) components. The application of ACS 470-20 resulted in the recognition of $23 million as the value for the equity component with the offset to debt discount. The debt discount is amortized to interest expense using the effective interest method over the term of the 2020 Convertible Notes.
As of December 31, 2015, the 2020 Convertible Notes were trading at approximately 86% of their face value, resulting in a total market value of $247 million compared to a carrying value of $266 million. The actual conversion value of the 2020 Convertible Notes is based on the product of the conversion rate and the market price of the Company's Class C common stock, as defined in the Convertible Debt indenture. As of December 31, 2015, the Company's Class C common stock closed at $14.76 per share, resulting in a pro forma conversion value for the Convertible Notes of approximately $154 million.
During the year ended December 31, 2015, the Company recorded the following expense in relation to the 2020 Convertible Notes at the effective rate of 5.10%:

(In millions)	 	 	
Interest expense at 3.25% coupon rate	 	$	5	
 	
Debt discount amortization	 	2	
 	
Debt issuance costs amortization	 	1	
 	
 	 	$	8	

36

                        

2019 Convertible Senior Notes
During the first quarter of 2014, the Company closed on its offering of $345 million aggregate principal amount of 3.50% Convertible Notes due 2019, or the 2019 Convertible Notes. Interest on the 2019 Convertible Notes is payable semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2014. The 2019 Convertible Notes were convertible, under certain circumstances, into the Company’s Class A common stock, cash or a combination thereof at an initial conversion price of $46.55 per Class A common share, which is equivalent to an initial conversion rate of approximately 21.4822 shares of Class A common stock per $1,000 principal amount of Convertible Notes. In connection with the Recapitalization, effective May 15, 2015, the conversion rate was adjusted to 42.9644 shares of Class A common stock per $1,000 principal amount of 2019 Convertible Notes in accordance with the terms of the related indenture. The 2019 Convertible Notes mature on February 1, 2019, unless earlier repurchased or converted in accordance with their terms. Prior to the close of business on the business day immediately preceding August 1, 2018, the 2019 Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The 2019 Convertible Notes are guaranteed by NRG Yield Operating LLC and NRG Yield LLC.
The 2019 Convertible Notes are accounted for in accordance with ASC 470-20. The application of ACS 470-20 resulted in the recognition of $23 million as the value for the equity component with the offset to debt discount. The debt discount is amortized to interest expense using the effective interest method through February 2019.
As of December 31, 2015, the 2019 Convertible Notes were trading at approximately 92% of their face value, resulting in a total market value of $319 million compared to a carrying value of $330 million. The actual conversion value of the 2019 Convertible Notes is based on the product of the conversion rate and the market price of the Company's Class A common stock, as defined in the Convertible Debt indenture. As of December 31, 2015, the Company's Class A common stock closed at $13.91 per share, resulting in a pro forma conversion value for the Convertible Notes of approximately $206 million.
During the year ended December 31, 2015, the Company recorded the following expense in relation to the 2019 Convertible Notes at the effective rate of 5.00%:

(In millions)	 	 	
Interest expense at 3.5% coupon rate	 	$	12	
 	
Debt discount amortization	 	4	
 	
Debt issuance costs amortization	 	2	
 	
 	 	$	18	

NRG Yield Operating LLC 2024 Senior Notes
On August 5, 2014, NRG Yield Operating LLC issued $500 million of senior unsecured notes, or the 2024 Senior Notes. The 2024 Senior Notes bear interest at 5.375% and mature in August 2024. Interest on the notes is payable semi-annually on February 15 and August 15 of each year, and commenced on February 15, 2015. The 2024 Senior Notes are senior unsecured obligations of NRG Yield Operating LLC and are guaranteed by NRG Yield LLC, and by certain of NRG Yield Operating LLC’s wholly owned current and future subsidiaries.
NRG Yield Operating LLC 2026 Senior Notes
On August 18, 2016, NRG Yield Operating LLC issued $350 million of senior unsecured notes, or the 2026 Senior Notes. The 2026 Senior Notes bear interest at 5.00% and  mature on September 15, 2026. Interest on the notes is payable semi-annually on March 15 and September 15 of each year, and commence on March 15, 2017. The 2026 Senior Notes are senior unsecured obligations of NRG Yield Operating LLC and are guaranteed by NRG Yield LLC, and by certain of Yield Operating LLC’s wholly owned current and future subsidiaries. A portion of proceeds of the 2026 Senior Notes were used to repay the revolving credit facility in full.

37

                        

NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility
In connection with the Company's initial public offering of Class A common stock in July 2013, as further described in Note 1,  Nature of Business , NRG Yield LLC and NRG Yield Operating LLC entered into a senior secured revolving credit facility, or the Yield Credit Facility, which was amended  on June 26, 2015, to, among other things, increase the availability to $495 million.  The Company's revolving credit facility can be used for cash or for the issuance of letters of credit.
On November 3, 2015, the Company borrowed $209 million from the revolving credit facility to finance the acquisition of the November 2015 Drop Down Assets as discussed in  Note 3 ,  Business Acquisitions . On December 14, 2015, the Company borrowed $45 million from the revolving credit facility to fund dividend payments and tax equity contributions. As of December 31, 2015, $306 million of borrowings and $56 million of letters of credit were outstanding.
The Company borrowed $60 million from the revolving credit facility and repaid $366 million during the eight months ended August 31, 2016. The repayments included the Company's pro rata proceeds of  $97.5 million  from the CVSR Holdco Financing Arrangement, as described below, along with  $28 million  of cash on hand. Additionally, in August 2016, the Company used a portion of its proceeds from the 2026 Senior Notes to pay the remaining revolver balance of $193 million in full as described above. There have been no further borrowings and $63 million of letters of credit were outstanding as of September 1, 2016.
Project - level Debt
El Segundo Credit Agreement
On August 23, 2011, NRG West Holdings LLC, or West Holdings, entered into a credit agreement with a group of lenders in respect to the El Segundo project, or the El Segundo Credit Agreement. The El Segundo Credit Agreement is comprised of a $540 million two tranche construction loan facility with additional facilities for the issuance of letters of credit or working capital loans and is secured by the assets of West Holdings.
The two tranche construction loan facility consists of the $480 million Tranche A Construction Facility, or the Tranche A Facility, and the $60 million Tranche B Construction Facility, or the Tranche B Facility, both of which mature in August 2023 and convert to a term loan. On May 29, 2015, NRG West Holdings amended its financing agreement to increase borrowings under the Tranche A facility by $5 million and to reduce the related interest rate to LIBOR plus an applicable margin of 1.625% from May 29, 2015, to August 31, 2017, LIBOR plus an applicable margin of 1.75% from September 1, 2017, to August 31, 2020, and LIBOR plus 1.875% from September 1, 2020, through the maturity date; to reduce the Tranche B loan interest rate to LIBOR plus an applicable margin of 2.250% from May 29, 2015, to August 31, 2017, LIBOR plus 2.375% from September 1, 2017, to August 31, 2020, and LIBOR plus an applicable margin of 2.50% from September 1, 2020, through the maturity date and to reduce the working capital facility by $9 million. The proceeds of the increased borrowing were used to pay costs associated with the refinancing. Further, the amendment resulted in a $7 million loss on debt extinguishment. 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. The construction loan converted to a term loan on January 28, 2014.
The El Segundo Credit Agreement also provides for the issuance of letters of credit and working capital loans to support the El Segundo project's collateral needs. This includes letter of credit facilities on behalf of El Segundo 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.
Alta Wind Financing Arrangements
On June 30, 2015, Yield Operating LLC entered into a tax equity financing arrangement through which it received $119 million in net proceeds, as described in Note 5,  Investments Accounted for by the Equity Method and Variable Interest Entities . These proceeds, as well as proceeds obtained from the June 29, 2015, Yield, Inc. common stock issuance, as described in Note 1,  Nature of Business , and the 2020 Convertible Notes issuance, as described above, were utilized to repay all of the project indebtedness associated with the Alta Wind X and Alta Wind XI wind facilities outstanding as of that date. The Company also settled interest rate swaps associated with the project level debt for the Alta Wind X and Alta Wind XI wind facilities at a value of $17 million.
Avenal
On March 18, 2015, Avenal, one of the Company's equity method investments, amended its credit agreement to increase its borrowings by $43 million and to reduce the related interest rate from 6 month LIBOR plus an applicable margin of 2.25% to 6 month LIBOR plus 1.75% from March 18, 2015, through March 17, 2022, 6 month LIBOR plus 2.00% from March 18, 2022, through March 17, 2027, and 6 month LIBOR plus 2.25% from March 18, 2027, through the maturity date.  As a result of the credit agreement amendment, the Company received net proceeds of $20 million after fees from its 49.95% ownership in Avenal. Effective September 30, 2015, the Company increased its ownership to 50% by acquiring an additional 0.05% membership interest in Avenal.

38

                        

Viento
On July 11, 2013, Viento entered into a credit agreement with lenders for a $200 million term loan with a maturity date of July 11, 2023 and a working capital facility in the amount of $9 million. The interest rate is 6 month LIBOR plus 2.75% until July 11, 2017 when it increases to LIBOR plus 3.00%. On July 11, 2021 it increases to LIBOR plus 3.25% through the maturity date. As of December 31, 2015, $189 million was outstanding under the term loan, nothing was outstanding under the working capital facility, and $27 million of letters of credit were issued.
CVSR
In 2011, High Plains Ranch II, LLC, the direct owner of CVSR, entered into the CVSR Financing Agreement with the FFB to borrow up to $1.2 billion to fund the costs of constructing the solar facility. The CVSR Financing Agreement matures in 2037 and the loans provided by the FFB are guaranteed by the U.S. DOE. Amounts borrowed under the CVSR Financing Agreement accrue interest at a fixed rate based on U.S. Treasury rates plus a spread of 0.375% and are secured by the assets of CVSR. As of December 31, 2015, and 2014, $793 million and $815 million, respectively, were outstanding under the loan. T he U.S. Treasury Department awarded cash grants on the CVSR project of $307 million ($285 million net of sequestration), which is approximately 75% of the cash grant amount for which the Company had applied. The cash grant proceeds were used to pay the outstanding balance of the bridge loan due in February 2014 and the remaining amount was used to pay a portion of the outstanding balance on the bridge loan due in August 2014. The remaining balance of the bridge loan due in August 2014 was paid by SunPower.
On July 15, 2016, CVSR Holdco LLC, the indirect owner of the CVSR project, issued $200 million of senior secured notes that bear interest at 4.68% and mature on March 31, 2037.  Interest on the notes is payable semi-annually on March 31 and September 30 of each year, and commence on September 30, 2016. Net proceeds were distributed to the Company and NRG based on the ownership as of July 15, 2016, and accordingly, the Company received net proceeds of  $97.5 million .
Lease financing arrangements
Alta Wind Holdings (Alta Wind II - V) and Alta I (operating entities) have finance lease obligations issued under lease transactions whereby the respective operating entities sold and leased back undivided interests in specific assets of the project. The sale and related lease transactions are accounted for as financing arrangements as the operating entities have continued involvement with the property. The terms and conditions of each facility lease are substantially similar. Each operating entity makes rental payments as stipulated in the facility lease agreements on a semiannual basis every June 30 and December 30 through the final maturity dates. In addition, the operating entities have a credit agreement with a group of lenders that provides for the issuance of letters of credit to support certain operating and debt service obligations. Certain O&M and rent reserve requirements are satisfied by letters of credit issued under the NRG Yield Operating agreement. As of December 31, 2015, $1,002 million was outstanding under the finance lease obligations, and $122 million of letters of credit were issued under the credit agreement and $19 million were issued under the Yield Credit Facility.
Interest Rate Swaps — Project Financings
Many of the Company's project subsidiaries entered into interest rate swaps, intended to hedge the risks associated with interest rates on non-recourse project level debt. These swaps amortize in proportion to their respective loans and are floating for fixed where the project subsidiary pays its counterparty the equivalent of a fixed interest payment on a predetermined notional value and will receive quarterly the equivalent of a floating interest payment based on the same notional value. All interest rate swap payments by the project subsidiary and its counterparty are made quarterly and the LIBOR is determined in advance of each interest period. In connection with the acquisition of the Alta Wind Portfolio, as described in Note 3,  Business Acquisitions , the Company acquired thirty-one additional interest rate swaps, thirty of which were settled during 2015 as discussed above. During 2015, the Company acquired thirty-two additional interest rate swaps in connection with the January 2015 and November 2015 drop downs, as described in Note 3,  Business Acquisitions.

39

                        

The following table summarizes the swaps, some of which are forward starting as indicated, related to the Company's project level debt as of December 31, 2015.

 	 	% of Principal	 	Fixed Interest Rate	 	Floating Interest Rate	 	Notional Amount at December 31, 2015
(In millions)	 	Effective Date	 	Maturity Date	
Alpine	 	85	%	 	2.744	%	 	3-Month LIBOR	 	$	122	
 	 	various	 	December 31, 2029	
Alpine	 	85	%	 	2.421	%	 	3-Month LIBOR	 	9	
 	 	June 24, 2014	 	June 30, 2025	
Avra Valley	 	85	%	 	2.333	%	 	3-Month LIBOR	 	51	
 	 	November 30, 2012	 	November 30, 2030	
AWAM	 	100	%	 	2.47	%	 	3-Month LIBOR	 	19	
 	 	May 22, 2013	 	May 15, 2031	
Blythe	 	75	%	 	3.563	%	 	3-Month LIBOR	 	16	
 	 	June 25, 2010	 	June 25, 2028	
Borrego	 	75	%	 	1.125	%	 	3-Month LIBOR	 	9	
 	 	April 3, 2013	 	June 30, 2020	
El Segundo	 	75	%	 	2.417	%	 	3-Month LIBOR	 	358	
 	 	November 30, 2011	 	August 31, 2023	
Kansas South	 	75	%	 	2.368	%	 	6-Month LIBOR	 	25	
 	 	June 28, 2013	 	December 31, 2030	
Laredo Ridge	 	75	%	 	2.31	%	 	3-Month LIBOR	 	83	
 	 	March 31, 2011	 	March 31, 2026	
Marsh Landing	 	75	%	 	3.244	%	 	3-Month LIBOR	 	387	
 	 	June 28, 2013	 	June 30, 2023	
Roadrunner	 	75	%	 	4.313	%	 	3-Month LIBOR	 	30	
 	 	September 30, 2011	 	December 31, 2029	
South Trent	 	75	%	 	3.265	%	 	3-Month LIBOR	 	46	
 	 	June 15, 2010	 	June 14, 2020	
South Trent	 	75	%	 	4.95	%	 	3-Month LIBOR	 	21	
 	 	June 30, 2020	 	June 14, 2028	
Tapestry	 	75	%	 	2.21	%	 	3-Month LIBOR	 	163	
 	 	December 30, 2011	 	December 21, 2021	
Tapestry	 	50	%	 	3.57	%	 	3-Month LIBOR	 	60	
 	 	December 21, 2021	 	December 21, 2029	
Viento	 	90	%	 	various	
 	 	6-Month LIBOR	 	235	
 	 	various	 	various	
Walnut Creek Energy	 	75	%	 	various	
 	 	3-Month LIBOR	 	311	
 	 	June 28, 2013	 	May 31, 2023	
WCEP Holdings	 	90	%	 	4.003	%	 	3-Month LIBOR	 	46	
 	 	June 28, 2013	 	May 31, 2023	
Total	 	 	 	 	 	 	 	$	1,991	
 	 	 	 	 	
Annual Maturities
Annual payments based on the maturities of the Company's debt, for the years ending after December 31, 2015, are as follows:

 	(In millions)	
2016	$	264	
 	
2017	277	
 	
2018	286	
 	
2019	951	
 	
2020	634	
 	
Thereafter	3,280	
 	
Total	$	5,692	

Note 10 — Earnings Per Share
Basic and diluted earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding. Shares issued during the year are weighted for the portion of the year that they were outstanding. The number of shares and per share amounts for the prior periods presented below have been retrospectively restated to reflect the Recapitalization as further described in Note 11,  Stockholders' Equity .

40

                        

The reconciliation of the Company's basic and diluted earnings per share is shown in the following table:

 	Year Ended December 31, 2015	 	Year Ended December 31, 2014	 	Period from July 23, 2013 to December 31, 2013	 	
 	 	 	 	 	 	 	 	
(In millions, except per share data)	Common Class A	 	Common Class C	 	Common Class A	 	Common Class C	 	Common Class A	 	Common Class C	 	 	
Basic and diluted earnings per share attributable to NRG Yield, Inc. common stockholders	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to NRG Yield, Inc. (a)	$	14	
 	 	$	19	
 	 	$	8	
 	 	$	8	
 	 	$	7	
 	 	$	7	
 	 	 	
Weighted average number of common shares outstanding	35	
 	 	49	
 	 	28	
 	 	28	
 	 	23	
 	 	23	
 	 	 	
Earnings per weighted average common share — basic and diluted  (a)	$	0.40	
 	 	$	0.40	
 	 	$	0.30	
 	 	$	0.30	
 	 	$	0.29	
 	 	$	0.29	

 	

(a) Net income attributable to NRG Yield, Inc. and basic and diluted earnings per share might not recalculate due to presenting values in millions rather than whole dollars.
With respect to the Class A common stock, there were a total of 15 million and 12 million anti-dilutive outstanding equity instruments for the years ended December 31, 2015, and 2014, respectively, related to the 2019 Convertible Notes. With respect to the Class C common stock, there were a total of 5 million anti-dilutive outstanding equity instruments for the year ended December 31, 2015, related to the 2020 Convertible Notes.

Note 11 — Stockholders' Equity
On July 22, 2013, in connection with its initial public offering, the Company authorized 500,000,000 shares of Class A common stock, of which 22,511,250 were issued to the public and became outstanding. In return for the issuance of these shares, the Company received $468 million, net of underwriting discounts and commissions of $27 million. In addition, the Company authorized 500,000,000 shares of Class B common stock, of which 42,738,750 were issued to NRG concurrently with the initial public offering and became outstanding. The Company utilized $395 million of the proceeds from the issuance of the Class A common stock to acquire a controlling interest in NRG Yield LLC from NRG. Each share of the Class A common stock and the Class B common stock entitles the holder to one vote on all matters.
On July 29, 2014, the Company issued 12,075,000 shares of Class A common stock for net proceeds, after underwriting discount and expenses, of $630 million. The Company utilized the proceeds of the offering to acquire 12,075,000 additional Class A units of NRG Yield LLC.
Recapitalization    
On May 5, 2015, the Company's stockholders approved amendments to the Company's certificate of incorporation that adjusted the Company’s capital structure by creating two new classes of capital stock, Class C common stock and Class D common stock, and distributed shares of Class C and Class D common stock to holders of the Company's outstanding Class A and Class B common stock, respectively, through a stock split. The Recapitalization became effective on May 14, 2015.
The Class C common stock and Class D common stock have the same rights and privileges and rank equally, share ratably and are identical in all respects to the shares of Class A common stock and Class B common stock, respectively, as to all matters, except that each share of Class C common stock and Class D common stock is entitled to 1/100th of a vote on all stockholder matters. The par value per share of the Company’s Class A common stock and Class B common stock remains unchanged at $0.01 per share after the effect of the stock split described above. Accordingly, the stock split was accounted for as a stock dividend. The Company recorded a transfer between retained earnings and common stock equal to the par value of each share of Class C common stock and Class D common stock that was issued. The Company also retrospectively adjusted all prior period share and per share amounts in the consolidated financial statements for the effect of the stock dividend, so that all periods are comparable.
Class C Common Stock Issuance
On June 29, 2015, the Company closed on its offering of 28,198,000 shares of Class C common stock, which included 3,678,000 shares of Class C common stock purchased by the underwriters through the exercise of an over-allotment option. Net proceeds to the Company from the sale of the Class C common stock were $599 million, net of underwriting discounts and commissions of $21 million. The Company utilized the proceeds of the offering to acquire 28,198,000 additional Class C units

41

                        

of NRG Yield LLC and, as a result, it currently owns 53.3% of the economic interests of NRG Yield LLC, with NRG retaining 46.7% of the economic interests of NRG Yield LLC.
Dividends to Class A and Class C common stockholders
The following table lists the dividends paid on the Company's Class A and Class C common stock during the year ended December 31, 2015:

 	Fourth Quarter 2015	 	Third Quarter 2015	 	Second Quarter 2015	 	First Quarter 2015	
Dividends per Class A share	$	0.215	
 	 	$	0.21	
 	 	$	0.20	
 	 	$	0.39	
 	
Dividends per Class C share	$	0.215	
 	 	$	0.21	
 	 	$	0.20	
 	 	N/A	
 	
Dividends on the Class A and Class C common stock are subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations. The Company expects that, based on current circumstances, comparable cash dividends will continue to be paid in the foreseeable future.
On February 17, 2016, the Company declared a quarterly dividend on its Class A and Class C common stock of $0.225 per share payable on March 15, 2016, to stockholders of record as of March 1, 2016.
On April 26, 2016, the Company declared a quarterly dividend on its Class A and Class C common stock of $0.23 per share payable on June 15, 2016 to stockholders of record as of June 1, 2016.
On July 26, 2016, the Company declared a quarterly dividend on its Class A and Class C common stock of $0.24 per share payable on September 15, 2016 to stockholders of record as of September 1, 2016.
The Company also authorized 10,000,000 shares of preferred stock, par value $0.01 per share. None of the shares of preferred stock have been issued.
Distributions to NRG
The following table lists the distributions paid to NRG during the year ended December 31, 2015:

 	Fourth Quarter 2015	 	Third Quarter 2015	 	Second Quarter 2015	 	First Quarter 2015	
Distributions per Class B unit	$	0.215	
 	 	$	0.21	
 	 	$	0.20	
 	 	$	0.39	
 	
Distributions per Class D unit	$	0.215	
 	 	$	0.21	
 	 	$	0.20	
 	 	N/A	
 	
The portion of the distributions paid by NRG Yield LLC to NRG is recorded as a reduction to the Company's noncontrolling interest balance. The portion of the distributions paid by NRG Yield LLC to the Company was utilized to fund the dividends to the Class A and Class C common stockholders described above.
On February 17, 2016, NRG Yield LLC declared a quarterly distribution on its Class B and Class D units of $0.225 per unit payable to NRG on March 15, 2016.
On April 26, 2016, NRG Yield LLC declared a quarterly distribution on its Class B and Class D units of $0.23 per unit payable to NRG on June 15, 2016 
On July 26, 2016, NRG Yield LLC declared a quarterly distribution on its Class B and Class D units of $0.24 per unit payable to NRG on September 15, 2016.
During 2016, 2015 and 2014, the Company acquired the Drop Down Assets from NRG, as described in Note 3, Business Acquisitions . The difference between the cash paid and historical value of the CVSR Drop Down was recorded as a contribution from NRG and increased the balance of its noncontrolling interest in 2016. The difference between the cash paid and historical value of the January 2015 and November 2015 Drop Down Assets of $109 million, as well as 32 million of AOCL, was recorded as a contribution from NRG and increased the balance of its noncontrolling interest in 2015. The difference between the cash paid and historical value of the June 2014 Drop Down Assets of $113 million was recorded as a distribution to NRG and reduced the balance of its noncontrolling interest in 2014.  In addition, as the projects were owned by NRG prior to the Company’s acquisitions, the pre-acquisition earnings of such projects are recorded as attributable to NRG's noncontrolling interest. Prior to the date of acquisition, certain of the projects made distributions to NRG and NRG made contributions into certain projects.  These amounts are reflected within the Company’s statement of stockholders’ equity as changes in the noncontrolling interest balance. In addition, NRG maintained a 25% ownership interest in the Class B interests of NRG TE Wind Holdco.  This 25% interest is also reflected within the Company’s noncontrolling interest balance.

42

                        

Note 12 — Segment Reporting
The Company’s segment structure reflects how management currently operates and allocates resources. The Company's businesses are primarily segregated based on conventional power generation, renewable businesses which consist of solar and wind, and the thermal and chilled water business. The Corporate segment reflects the Company's corporate costs. The Company's chief operating decision maker, its Chief Executive Officer, evaluates the performance of its segments based on operational measures including adjusted earnings before interest, taxes, depreciation and amortization, or Adjusted EBITDA, and CAFD, as well as net income (loss).
The Company generated more than 10% of its revenues from the following customers for the years ended December 31, 2015, 2014 and 2013:

 	2015	 	2014	 	2013	
Customer	Conventional (%)	 	Renewables (%)	 	Conventional (%)	 	Renewables (%)	 	Conventional (%)	 	Renewables (%)	
SCE	23%	 	17%	 	24%	 	7%	 	13%	 	3%	
PG&E	13%	 	12%	 	15%	 	13%	 	19%	 	17%	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

 	Year ended December 31, 2015	
(In millions)	Conventional Generation	
 	Renewables	
 	Thermal	
 	Corporate	
 	Total	
Operating revenues	$	336	
 	
 	$	443	
 	
 	$	174	
 	
 	$	—	
 	
 	$	953	
 	
Cost of operations	59	
 	 	136	
 	 	126	
 	
 	—	
 	
 	321	
 	
Depreciation and amortization	81	
 	
 	197	
 	
 	19	
 	
 	—	
 	
 	297	
 	
General and administrative	—	
 	
 	—	
 	
 	—	
 	
 	12	
 	
 	12	
 	
Acquisition-related transaction and integration costs	—	
 	 	—	
 	 	—	
 	 	3	
 	 	3	
 	
Operating income (loss)	196	
 	 	110	
 	 	29	
 	 	(15	)	 	320	
 	
Equity in earnings of unconsolidated affiliates	14	
 	
 	12	
 	
 	—	
 	
 	—	
 	
 	26	
 	
Other income, net	1	
 	 	2	
 	 	—	
 	 	—	
 	 	3	
 	
Loss on extinguishment of debt	(7	)	 	(2	)	 	—	
 	 	—	
 	 	(9	)	
Interest expense	(48	)	
 	(147	)	
 	(7	)	
 	(61	)	
 	(263	)	
Income (loss) before income taxes	156	
 	
 	(25	)	
 	22	
 	
 	(76	)	
 	77	
 	
Income tax expense	—	
 	
 	—	
 	
 	—	
 	
 	12	
 	
 	12	
 	
Net Income (Loss)	$	156	
 	
 	$	(25	)	
 	$	22	
 	
 	$	(88	)	
 	$	65	
 	
Balance Sheet	

 	

 	

 	

 	

Equity investment in affiliates	$	110	
 	
 	$	587	
 	
 	$	—	
 	
 	$	—	
 	
 	$	697	
 	
Capital expenditures (a)	4	
 	
 	6	
 	
 	20	
 	
 	—	
 	
 	30	
 	
Total Assets	$	2,102	
 	
 	$	5,970	
 	
 	$	428	
 	
 	$	189	
 	
 	$	8,689	

 	

(a)  Includes accruals.

43

                        

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31, 2014	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	317	
 	 	$	316	
 	 	$	195	
 	 	$	—	
 	 	$	828	
 	
Cost of operations	55	
 	 	83	
 	 	139	
 	 	—	
 	 	277	
 	
Depreciation and amortization	82	
 	 	133	
 	 	18	
 	 	—	
 	 	233	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	8	
 	 	8	
 	
Acquisition-related transaction and integration costs	—	
 	 	—	
 	 	—	
 	 	4	
 	 	4	
 	
Operating income (loss)	180	
 	 	100	
 	 	38	
 	 	(12	)	 	306	
 	
Equity in earnings of unconsolidated affiliates	14	
 	 	3	
 	 	—	
 	 	—	
 	 	17	
 	
Other income, net	—	
 	 	5	
 	 	—	
 	 	1	
 	 	6	
 	
Loss on extinguishment of debt	—	
 	 	(1	)	 	—	
 	 	—	
 	 	(1	)	
Interest expense	(53	)	 	(126	)	 	(7	)	 	(30	)	 	(216	)	
Income (loss) before income taxes	141	
 	 	(19	)	 	31	
 	 	(41	)	 	112	
 	
Income tax expense	—	
 	 	—	
 	 	—	
 	 	4	
 	 	4	
 	
Net Income (Loss)	$	141	
 	 	$	(19	)	 	$	31	
 	 	$	(45	)	 	$	108	
 	
Balance Sheet	 	 	 	 	 	 	 	 	 	
Equity investments in affiliates	$	114	
 	 	$	194	
 	 	$	—	
 	 	$	—	
 	 	$	308	
 	
Capital expenditures (a)	6	
 	 	27	
 	 	7	
 	 	—	
 	 	40	
 	
Total Assets	$	2,169	
 	 	$	5,724	
 	 	$	436	
 	 	$	465	
 	 	$	8,794	

 	

(a)  Includes accruals. Capital expenditures for Renewables include a sales tax refund received by Alpine in the first quarter of 2014.

 	Year ended December 31, 2013	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	138	
 	 	$	144	
 	 	$	152	
 	 	$	—	
 	 	$	434	
 	
Cost of operations	23	
 	 	21	
 	 	110	
 	 	—	
 	 	154	
 	
Depreciation and amortization	20	
 	 	57	
 	 	15	
 	 	—	
 	 	92	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	7	
 	 	7	
 	
Operating income (loss)	95	
 	 	66	
 	 	27	
 	 	(7	)	 	181	
 	
Equity in earnings of unconsolidated affiliates	16	
 	 	4	
 	 	—	
 	 	—	
 	 	20	
 	
Other income, net	1	
 	 	3	
 	 	—	
 	 	—	
 	 	4	
 	
Interest expense	(25	)	 	(40	)	 	(7	)	 	—	
 	 	(72	)	
Income (loss) before income taxes	87	
 	 	33	
 	 	20	
 	 	(7	)	 	133	
 	
Income tax expense	—	
 	 	—	
 	 	—	
 	 	8	
 	 	8	
 	
Net Income (Loss)	$	87	
 	 	$	33	
 	 	$	20	
 	 	$	(15	)	 	$	125	
 	
Note 13 — Income Taxes
Effective Tax Rate
The income tax provision consisted of the following amounts:

 	Year Ended December 31,	
 	2015	 	2014	 	2013	
 	(In millions, except percentages)	
Current	 	 	 	 	 	
U.S. Federal	$	—	
 	 	$	—	
 	 	$	—	
 	
Total — current	—	
 	 	—	
 	 	—	
 	
Deferred	 	 	 	 	 	
U.S. Federal	10	
 	 	2	
 	 	14	
 	
State	2	
 	 	2	
 	 	(6	)	
Total — deferred	12	
 	 	4	
 	 	8	
 	
Total income tax expense	$	12	
 	 	$	4	
 	 	$	8	
 	
Effective tax rate	15.6	%	 	3.6	%	 	5.8	%	

44

                        

A reconciliation of the U.S. federal statutory rate of 35% to the Company's effective rate is as follows:

 	Year Ended December 31,	
 	2015	 	2014	 	2013 (a)	
 	(In millions, except percentages)	
Income Before Income Taxes	77	
 	 	112	
 	 	133	
 	
Tax at 35%	27	
 	 	39	
 	 	47	
 	
State taxes, net of federal benefit	2	
 	 	1	
 	 	(6	)	
Investment tax credits	(1	)	 	—	
 	 	—	
 	
Impact of non-taxable partnership earnings	(15	)	 	(31	)	 	(33	)	
Production tax credits	(4	)	 	(6	)	 	—	
 	
Change in state effective tax rate	—	
 	 	1	
 	 	—	
 	
Other	3	
 	 	—	
 	 	—	
 	
Income tax expense	$	12	
 	 	$	4	
 	 	$	8	
 	
Effective income tax rate	15.6	%	 	3.6	%	 	5.8	%	

 	
 	
(a)  Represents 34.5% ownership for the period July 22, 2013 through December 31, 2013.
For the years ended December 31, 2015, 2014 and 2013, the overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and production tax credits generated from certain wind facilities.
The Company currently owns 53.3% of NRG Yield LLC and consolidates the results due to its controlling interest. The Company records NRG's 46.7% ownership as noncontrolling interest in the financial statements. For tax purposes, NRG Yield LLC is treated as a partnership; therefore, the Company and NRG each record their respective share of taxable income or loss.
The temporary differences, which gave rise to the Company's deferred tax assets, consisted of the following:

 	As of December 31,	
 	2015	 	2014	
 	(In millions)	
Deferred tax assets:	 	 	 	
Investment in projects	$	—	
 	 	$	47	
 	
Production tax credits carryforwards	10	
 	 	6	
 	
Investment tax credits	1	
 	 	—	
 	
U.S. Federal net operating loss carryforwards	181	
 	 	74	
 	
State net operating loss carryforwards	5	
 	 	7	
 	
Total deferred tax assets	197	
 	 	134	
 	
Deferred tax liabilities:	 	 	 	
Investment in projects	$	27	
 	 	$	—	
 	
Total deferred tax liabilities	27	
 	 	—	
 	
Net non-current deferred tax asset	$	170	
 	 	$	134	
 	
Tax Receivable and Payable
As of December 31, 2015, the Company had a domestic tax receivable of $6 million, which related to federal cash grants for the Borrego project. This amount is fully reserved pending further discussions with the US Treasury Department.
Deferred Tax Assets and Valuation Allowance
Net deferred tax balance — As of December 31, 2015, and 2014, NRG recorded a net deferred tax asset of $170 million and $134 million, respectively. The Company believes it is more likely than not that the results of future operations will generate sufficient taxable income which includes the future reversal of existing taxable temporary differences to realize deferred tax assets. In arriving at this conclusion to utilize projections of future profit before tax in its estimate of future taxable income, the Company considered the profit before tax generated in recent years.
NOL carryforwards — At December 31, 2015, the Company had domestic NOLs carryforwards for federal income tax purposes of $181 million and cumulative state NOLs of $5 million tax-effected.

45

                        

Uncertain Tax Positions
The Company had no identified uncertain tax positions that require evaluation as of December 31, 2015.

Note 14 — Related Party Transactions
In addition to the transactions and relationships described elsewhere in the notes to the consolidated financial statements, certain subsidiaries of NRG provide services to the Company's project entities. Amounts due to NRG subsidiaries are recorded as accounts payable — affiliate and amounts due to the Company from NRG subsidiaries are recorded as accounts receivable — affiliate in the Company's balance sheet.
Power Hedge Contracts by and between Renewable Entities and NRG Texas Power LLC
Elbow Creek and Goat Wind, the Company's subsidiaries from Renewable segment, entered into power hedge contracts with NRG Texas Power LLC and generated $16 million, $12 million and $7 million during the years ended December 31, 2015, 2014 and 2013, respectively.  Included in the revenues for the years ended December 31, 2015, and 2014, are unrealized losses and gains, respectively, on forward contracts with NRG Texas Power LLC hedging the sale of power from the Elbow Creek wind facility extending through the end of 2015, as further described in Note 7 , Accounting for Derivative Instruments and Hedging Activities .
Operations and Maintenance Services (O&M) Agreements by and between Thermal Entities and NRG
On October 1, 2014, NRG entered into Plant O&M Services Agreements with certain wholly-owned subsidiaries of the Company. NRG provides necessary and appropriate services to operate and maintain the subsidiaries' plant operations, businesses and thermal facilities. NRG is to be reimbursed for the provided services, as well as for all reasonable and related expenses and expenditures, and payments to third parties for services and materials rendered to or on behalf of the parties to the agreements. NRG is not entitled to any management fee or mark-up under the agreements. Prior to October 1, 2014, NRG provided the same services to Thermal entities on an informal basis. For the years ended December 31, 2015, 2014, and 2013, total fees incurred under the agreements were $29 million, $27 million, and $24 million, respectively. There was a balance of $29 million and $22 million due to NRG in accounts payable — affiliate as of December 31, 2015, and 2014, respectively.
Power Sales and Services Agreement by and between NRG Energy Center Dover LLC and NRG
NRG Energy Center Dover LLC, or NRG Dover, a subsidiary of the Company is party to a Power Sales and Services Agreement with NRG Power Marketing LLC, or NRG Power Marketing, a wholly-owned subsidiary of NRG. The agreement is automatically renewed on a month-to-month basis unless terminated by either party upon at least 30 day written notice. Under the agreement, NRG Power Marketing has the exclusive right to (i) manage, market and sell power, (ii) procure fuel and fuel transportation for operation of the Dover generating facility, to include for purposes other than generating power, (iii) procure transmission services required for the sale of power, and (iv) procure and market emissions credits for operation of the Dover generating facility.
In addition, NRG Power Marketing has the exclusive right and obligation to direct the output from the generating facility, in accordance with and to meet the terms of any power sales contracts executed against the power generation of the Dover facility. Under the agreement, NRG Power Marketing pays NRG Dover gross receipts generated through sales, less costs incurred by NRG Power Marketing related to providing such services as transmission and delivery costs, as well as fuel costs. In July 2013, the originally coal-fueled plant was converted to a natural gas facility. For the years ended December 31, 2015, 2014 and 2013, NRG Dover purchased approximately $5 million, $10 million and $5 million, respectively, of natural gas from NRG Power Marketing.
Energy Marketing Services Agreement by and between NRG Energy Center Minneapolis LLC and NRG
NRG Energy Center Minneapolis LLC, or NRG Minneapolis, a subsidiary of the Company is party to an Energy Marketing Services Agreement with NRG Power Marketing, a wholly-owned subsidiary of NRG. The agreement commenced in August 2014 and is automatically renewed annually unless terminated by either party upon at least 90 day written notice prior to the end of any term. Under the agreement, NRG Power Marketing will procure fuel and fuel transportation for the operation of the Minneapolis generating facility. For the years ended December 31, 2015 and 2014, NRG Minneapolis purchased approximately $8 million and $2 million, respectively, of natural gas from NRG Power Marketing.
O&MServices Agreements by and between GenConn and NRG
GenConn incurs fees under two O&M agreements with wholly-owned subsidiaries of NRG. The fees incurred under the agreements were $4 million, $6 million and $5 million for the years ended December 31, 2015, 2014 and 2013, respectively.
O&MServices Agreements by and between El Segundo and NRG El Segundo Operations

46

                        

El Segundo incurs fees under an O&M agreement with NRG El Segundo Operations, Inc., a wholly-owned subsidiary of NRG. Under the O&M agreement, NRG El Segundo Operations, Inc. manages, operates and maintains the El Segundo facility for an initial term of ten years following the commercial operations date. For the years ended December 31, 2015, and 2014, the costs incurred under the agreement were approximately $4 million. The Company incurred $5 million in costs under the agreement for the year ended December 31, 2013. There was a balance of $1 million due to NRG El Segundo in accounts payable — affiliate as of December 31, 2015, and 2014.
Energy Marketing Services Agreement with NRG Power Marketing LLC
El Segundo was a party to an energy marketing services agreement with NRG Power Marketing LLC to procure fuel and market capacity, energy and ancillary output of the facility prior to the start of the PPA with Southern California Edison. The agreement began in April 2013 and ended at the commercial operations date in August 2013. For the years ended December 31, 2014, and 2013, the Company recorded approximately, $1 million and $12 million, respectively, in costs related to this agreement, of which $9 million was recorded to property, plant and equipment in 2013, with the remaining amount recorded to cost of operations in the Company's statement of operations. There were no costs incurred during the year ended December 31, 2015.
Administrative Services Agreement by and between Marsh Landing and GenOn Energy Services, LLC
Marsh Landing is a party to an administrative services agreement with GenOn Energy Services, LLC, a wholly owned subsidiary of NRG, which provides with processing and paying invoices services on behalf of Marsh Landing. Marsh Landing reimburses GenOn Energy Services, LLC for the amounts paid by it. The Company reimbursed costs under this agreement of approximately $13 million for the years ended December 31, 2015, and 2014, respectively, and $36 million for the year ended December 31, 2013. For the years ended December 31, 2014 and 2013, $2 million and $29 million, respectively, were capitalized. There was a balance of $6 million and $4 million due to GenOn Energy Services, LLC in accounts payable — affiliate as of December 31, 2015, and 2014, respectively.
Administrative Services Agreement by and between CVSR and NRG
CVSR is a party to an administrative services agreement with NRG Energy Services LLC, a wholly-owned subsidiary of NRG, which provides O&M services on behalf of CVSR. CVSR reimburses NRG Energy Services LLC for the amounts paid by it. CVSR reimbursed costs under this agreement of $5 million and $7 million for the years ended December 31, 2015, and 2014, respectively.
Management Services Agreement by and between the Company and NRG
NRG provides the Company with various operation, management, and administrative services, which include human resources, accounting, tax, legal, information systems, treasury, and risk management, as set forth in the Management Services Agreement. As of December 31, 2015, the base management fee was approximately $7 million per year, subject to an inflation-based adjustment annually, at an inflation factor based on the year-over-year U.S. consumer price index. The fee is also subject to adjustments following the consummation of future acquisitions and as a result of a change in the scope of services provided under the Management Services Agreement. During the year ended December 31, 2015, the fee was increased by approximately $1 million per year primarily in connection with the acquisition of the January 2015 and November 2015 Drop Down Assets. Costs incurred under this agreement were approximately $8 million and $6 million for the years ended December 31, 2015, and 2014 and $3 million for the period from July 23, 2013 through December 31, 2013. These costs included certain direct expenses incurred by NRG on behalf of the Company in addition to the base management fee, none of which was payable as of December 31, 2015.
Administrative Services Agreements by and between Wind TE Holdco LLC and NRG
Certain subsidiaries of NRG have entered into agreements with the Company's project entities to provide operation and maintenance services for the balance of the plants not covered by turbine supplier's maintenance and service agreements for the postwarranty period. The agreements have various terms with provisions for extension until terminated. For the years ended December 31, 2015, and 2014, the costs incurred under the agreements were $5 million and $3 million, respectively.    
Certain subsidiaries of NRG provide support services to NRG Wind TE Holdco LLC project entities pursuant to various support services agreements. The agreements provide for administrative and support services and reimbursements of certain insurance, consultant, and credit costs. For the years ended December 31, 2015, and 2014, the costs incurred under the agreements were $3 million and $1 million, respectively.

47

                        

Accounts Payable to NRG Repowering Holdings LLC
During 2013, NRG Repowering Holdings, LLC, a wholly-owned subsidiary of NRG, made payments to BA Leasing BSC, LLC, or BA Leasing, of $18 million, which were expected to be repaid with the proceeds of the cash grant received by BA Leasing with respect to the PFMG DG Solar Projects, in connection with a sale-leaseback arrangement between the PFMG DG Solar Projects and BA Leasing. As of December 31, 2013, PFMG DG Solar Projects had a corresponding receivable for the reimbursement of the cash grant from BA Leasing and related payable to NRG Repowering Holdings, LLC. In the first quarter of 2014, the PFMG DG Solar Projects received $11 million from BA Leasing and reduced the remaining receivable with an offset to the deferred liability recorded in connection with the sale - leaseback arrangement. The PFMG DG Solar Projects utilized the $11 million to repay NRG Repowering Holdings LLC. There was a balance of $7 million in accounts payable — affiliate as of December 31, 2015, and 2014.
Note 15 — Commitments and Contingencies
Operating Lease Commitments
The Company leases certain facilities and equipment under operating leases, some of which include escalation clauses, expiring on various dates through 2048. The effects of these scheduled rent increases, leasehold incentives, and rent concessions are recognized on a straight-line basis over the lease term unless another systematic and rational allocation basis is more representative of the time pattern in which the leased property is physically employed. Lease expense under operating leases was $10 million, $9 million and $3 million for the years ended December 31, 2015, 2014 and 2013, respectively.
Future minimum lease commitments under operating leases for the years ending after December 31, 2015, are as follows:

Period	(In millions)	
2016	$	14	
 	
2017	10	
 	
2018	10	
 	
2019	10	
 	
2020	10	
 	
Thereafter	165	
 	
Total	$	219	
 	
Gas and Transportation Commitments
The Company has entered into contractual arrangements to procure power, fuel and associated transportation services. For the years ended December 31, 2015, 2014 and 2013, the Company purchased $40 million, $55 million, and $40 million, respectively, under such arrangements. As further described in Note 14  Related Party Transactions,  these balances include intercompany sales in the amount of $13 million, $12 million and $7 million, respectively.
As of December 31, 2015, the Company's commitments under such outstanding agreements are estimated as follows:

Period	(In millions)	
2016	$	12	
 	
2017	6	
 	
2018	3	
 	
2019	3	
 	
2020	3	
 	
Thereafter	21	
 	
Total	$	48	
 	
Contingencies

48

                        

The Company's material legal proceeding is described below. The Company believes that it has a valid defense to this legal proceeding and intends to defend it vigorously. The Company records reserves for estimated losses from contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. In addition, legal costs are expensed as incurred. Management assesses such matters based on current information and makes a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought, and the probability of success. The Company is unable to predict the outcome of the legal proceeding below or reasonably estimate the scope or amount of any associated costs and potential liabilities. As additional information becomes available, management adjusts its assessment and estimates of such contingencies accordingly. Because litigation is subject to inherent uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of the Company's liabilities and contingencies could be at amounts that are different from its currently recorded reserves and that such difference could be material.
In addition to the legal proceeding noted below, the Company and its subsidiaries are party to other litigation or legal proceedings arising in the ordinary course of business. In management's opinion, the disposition of these ordinary course matters will not materially adversely affect the Company's consolidated financial position, results of operations, or cash flows.
Braun v. NRG Yield, Inc. — On April 19, 2016, plaintiffs filed a purported class action lawsuit against NRG Yield, Inc. and against each current and former member of its board of directors individually in California Superior Court in Kern County, CA. Plaintiffs allege various violations of the Securities Act due to the defendants’ alleged failure to disclose material facts related to low wind production prior to the Company's June 22, 2015 Class C common stock offering. Plaintiffs seek compensatory damages, rescission, attorney’s fees and costs.  On August 3, 2016, the court approved a stipulation entered into by the parties. The stipulation provided that the plaintiffs would file an amended complaint by August 19, 2016, which they did on August 18, 2016. The Defendants need to file a responsive pleading by October 18, 2016.

Note 16 — Unaudited Quarterly Data
Refer to Note 2, Summary of Significant Accounting Policies, and Note 3, Business Acquisitions, for a description of the effect of unusual or infrequently occurring events during the quarterly periods. Summarized unaudited quarterly financial data is as follows:

 	Quarter Ended	
 	December 31, (a)	 	September 30, (a)	 	June 30, (a)	 	March 31, (a)	
 	2015	
 	(In millions, except per share data)	
Operating Revenues	$	224	
 	 	$	256	
 	 	$	259	
 	 	$	214	
 	
(As previously reported)	 	 	 	 	 	 	 	
Operating Revenues	209	
 	 	225	
 	 	235	
 	 	200	
 	
Change	15	
 	 	31	
 	 	24	
 	 	14	

Operating Income	70	
 	 	101	
 	 	99	
 	 	50	
 	
(As previously reported)	 	 	 	 	 	 	 	
Operating Income	66	
 	 	80	
 	 	85	
 	 	46	
 	
Change	4	
 	 	21	
 	 	14	
 	 	4	

Net Income (Loss)	12	
 	 	32	
 	 	42	
 	 	(21	)	
(As previously reported)	 	 	 	 	 	 	 	
Net Income (Loss)	13	
 	 	24	
 	 	38	
 	 	(20	)	
Change	(1	)	 	8	
 	 	4	
 	 	(1	)	
Net Income (Loss) Attributable to NRG Yield, Inc.	$	11	
 	 	$	17	
 	 	$	10	
 	 	$	(5	)	
Weighted average number of Class A common shares outstanding - basic and diluted	35	
 	 	35	
 	 	35	
 	 	35	
 	
Weighted average number of Class C common shares outstanding - basic and diluted  (b)	63	
 	 	63	
 	 	35	
 	 	35	
 	
Earnings (Losses) per Weighted Average Class A and Class C Common Share - Basic and Diluted  	$	0.12	
 	 	$	0.18	
 	 	$	0.15	
 	 	$	(0.07	)	

 	

49

                        

(a) The Company's unaudited quarterly financial data was recast for the effect of the CVSR Drop Down.

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Quarter Ended	
 	December 31, (a)	 	September 30, (a)	 	June 30, (a)	 	March 31, (a)	
 	2014	
 	(In millions, except per share data)	
Operating Revenues	$	225	
 	 	$	230	
 	 	$	219	
 	 	$	154	
 	
(As previously reported)	 	 	 	 	 	 	 	
Operating Revenues	212	
 	 	199	
 	 	194	
 	 	141	
 	
Change	13	
 	 	31	
 	 	25	
 	 	13	

 	 	 	 	 	 	 	 	
Operating Income	74	
 	 	97	
 	 	82	
 	 	53	
 	
(As previously reported)	 	 	 	 	 	 	 	
Operating Income	71	
 	 	84	
 	 	60	
 	 	51	
 	
Change	3	
 	 	13	
 	 	22	
 	 	2	

 	 	 	 	 	 	 	 	
Net Income	4	
 	 	41	
 	 	43	
 	 	20	
 	
(As previously reported)	 	 	 	 	 	 	 	
Net Income	4	
 	 	37	
 	 	35	
 	 	23	
 	
(Change)	—	
 	 	4	
 	 	8	
 	 	(3	)	
 	 	 	 	 	 	 	 	
Net Income Attributable to NRG Yield, Inc.	—	
 	 	6	
 	 	6	
 	 	4	
 	
Weighted average number of Class A and C common shares outstanding - basic and diluted	35	
 	 	31	
 	 	23	
 	 	23	
 	
Earnings per Weighted Average Class A and Class C Common Share - Basic and Diluted	$	0.01	
 	 	$	0.10	
 	 	$	0.13	
 	 	$	0.09	

 	

(a) The Company's unaudited quarterly financial data was recast for the effect of the effect of the CVSR Drop Down.

50

                        

Schedule I
NRG Yield, Inc. (Parent)
Condensed Financial Information of Registrant
Condensed Statement of Income

 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31,	
(In millions)	2015 (a)	 	2014 (a)	 	2013 (a)	
 	 	 	 	 	 	
Total operating expense	$	2	
 	 	$	—	
 	 	$	—	
 	
Equity earnings in consolidated subsidiaries	88	
 	 	117	
 	 	79	
 	
Interest expense	(9	)	 	(5	)	 	—	
 	
Total other income, net	79	
 	 	112	
 	 	79	
 	
Income Before Income Taxes	77	
 	 	112	
 	 	79	
 	
Income tax expense	12	
 	 	4	
 	 	8	
 	
Net Income	65	
 	 	108	
 	 	71	
 	
Less: Net income attributable to noncontrolling interests	42	
 	 	48	
 	 	42	
 	
Less: Pre-acquisition net (loss) income of Drop Down Assets	(10	)	 	44	
 	 	16	
 	
Net Income Attributable to NRG Yield, Inc.	$	33	
 	 	$	16	
 	 	$	13	

 	

(a) Retrospectively adjusted as discussed in Item 15 — Note 1, Nature of Business of the Company's Consolidated Financial Statements.

See accompanying notes to condensed financial statements.

51

                        

Schedule I
NRG Yield, Inc. (Parent)
Condensed Balance Sheets

 	Year ended December 31,	
 	2015 (a)	 	2014 (a)	
 	(In millions)	
Assets	 	 	 	
Current Assets:	 	 	 	
Cash and cash equivalents	$	1	
 	 	$	—	
 	
Noncurrent Assets:	 	 	 	
Investment in consolidated subsidiaries	2,540	
 	 	2,582	
 	
Note receivable - Yield Operating	618	
 	 	337	
 	
Deferred income taxes	170	
 	 	134	
 	
Total Assets	3,329	
 	 	3,053	

Liabilities and Equity	 	 	 	
 	 	 	 	
Accounts payable — affiliate	4	
 	 	—	
 	
Other current liabilities	1	
 	 	—	
 	
Long-term debt	586	
 	 	321	
 	
Total Liabilities	591	
 	 	321	

Stockholders' Equity:	 	 	 	
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued	—	
 	 	—	
 	
Class A, Class B, Class C and Class D common stock, $0.01 par value; 3,000,000,000 shares authorized (Class A 500,000,000, Class B 500,000,000, Class C 1,000,000,000, Class D 1,000,000,000); 182,848,000 shares issued and outstanding (Class A 34,586,250, Class B 42,738,750, Class C 62,784,250, Class D 42,738,750) at December 31, 2015 and 154,650,000 shares issued and outstanding (Class A 34,586,250, Class B 42,738,750, Class C 34,586,250, Class D 42,738,750) at December 31, 2014	1	
 	 	—	
 	
Additional paid-in capital	1,855	
 	 	1,240	
 	
Retained earnings	12	
 	 	3	
 	
Accumulated other comprehensive loss	(27	)	 	(9	)	
Noncontrolling interest	897	
 	 	1,498	
 	
Total Stockholders' Equity	2,738	
 	 	2,732	
 	
Total Liabilities and Stockholders' Equity	$	3,329	
 	 	$	3,053	

 	

(a) Retrospectively adjusted as discussed in Item 15 — Note 1, Nature of Business of the Company's Consolidated Financial Statements.

See accompanying notes to condensed financial statements.

52

                        

Schedule I
NRG Yield, Inc. (Parent)
Condensed Statements of Cash Flows

 	 	 	 	 	 	 	 	 	 	 	 	
 	Years ended December 31,	
 	2015 (a)	 	2014 (a)	 	2013 (a)	
 	(In millions)	
Net Cash Provided by (Used in) Operating Activities	$	2	
 	 	$	(1	)	 	$	5	
 	
Cash Flows from Investing Activities	 	 	 	 	 	
Investments in consolidated affiliates	(600	)	 	(630	)	 	(468	)	
Increase in notes receivable - affiliate	(281	)	 	(337	)	 	—	
 	
Net Cash Used in Investing Activities	(881	)	
 	(967	)	 	(468	)	
Cash Flows from Financing Activities	 	 	 	 	 	
Proceeds from issuance of debt	288	
 	 	345	
 	 	—	
 	
Proceeds from the issuance of common stock	599	
 	 	630	
 	 	468	
 	
Payment of debt issuance costs	(7	)	 	(7	)	 	—	
 	
Cash received from Yield LLC for the payment of dividends	69	
 	 	41	
 	 	—	
 	
Payment of dividends	(69	)	 	(41	)	 	(5	)	
Net Cash Provided by Financing Activities	880	
 	 	968	
 	 	463	
 	
Net Increase in Cash and Cash Equivalents	1	
 	 	—	
 	 	—	
 	
Cash and Cash Equivalents at Beginning of Period	—	
 	 	—	
 	 	—	
 	
Cash and Cash Equivalents at End of Period	$	1	
 	 	$	—	
 	 	$	—	

 	

(a) Retrospectively adjusted as discussed in Note 1, Nature of Business of the Company's Consolidated Financial Statements.

See accompanying notes to condensed financial statements.

53

                        

Schedule I
NRG Yield, Inc. (Parent)
Notes to Condensed Financial Statements

Note 1 — Background and Basis of Presentation
Background
NRG Yield, Inc., is a dividend growth-oriented company formed by NRG, as a Delaware corporation on December 20, 2012. The Company used the net proceeds from its initial public offering of Class A common stock on July 22, 2013, to acquire 19,011,250 Class A units of NRG Yield LLC from NRG, as well as 3,500,000 Class A units directly from NRG Yield LLC. At the time of the offering, NRG owned 42,738,750 NRG Yield LLC Class B units. NRG Yield LLC, through its wholly owned subsidiary, NRG Yield Operating LLC, is a holder of a portfolio of renewable and conventional generation and thermal infrastructure assets, primarily located in the Northeast, Southwest and California regions of the U.S.
On July 29, 2014, the Company issued 12,075,000 shares of Class A common stock for net proceeds, after underwriting discount and expenses, of $630 million. The Company utilized the proceeds of the offering to acquire 12,075,000 additional Class A units of NRG Yield LLC. On May 14, 2015, the Company completed a stock split in connection with which each outstanding share of Class A common stock was split into one share of Class A common stock and one share of Class C common stock, and each outstanding share of Class B common stock was split into one share of Class B common stock and one share of Class D common stock. The stock split is referred to as the Recapitalization and all applicable disclosures have been retrospectively adjusted to reflect the Recapitalization. In addition, on June 29, 2015, the Company completed the issuance of 28,198,000 shares of Class C common stock for net proceeds of $599 million. See further discussion in Note 11,  Stockholders' Equity  to the Company's consolidated financial statements. As a result and as of December 31, 2015, the Company has a 53.3% economic interest in NRG Yield LLC.
The holders of the Company's issued and outstanding shares of Class A and Class C common stock have 100% of economic interest in the Company and are entitled to dividends. NRG receives its distributions from Yield LLC through its ownership of Class B and Class D common units.
Basis of Presentation
The condensed parent-only company financial statements have been prepared in accordance with Rule 12-04 of Regulation S-X, as the restricted net assets of NRG Yield, Inc.’s subsidiaries exceed 25% of the consolidated net assets of NRG Yield, Inc. The parent's 100% investment in its subsidiaries has been recorded using the equity basis of accounting in the accompanying condensed parent-only financial statements. These statements should be read in conjunction with the consolidated financial statements and notes thereto of NRG Yield, Inc. As described in Note 1,  Nature of Business , to the Company's consolidated financial statements, the Company's historical financial statements previously filed with the SEC have been recast to include the results attributable to the CVSR Drop Down and the November 2015 Drop Down Assets from the date these entities were under common control.
Note 2 — Long-Term Debt
For a discussion of NRG Yield Inc.’s financing arrangements, see Note 9, Long-term Debt, to the Company's consolidated financial statements.
Note 3 — Commitments, Contingencies and Guarantees
See Note 13, Income Taxes and Note 15, Commitments and Contingencies to the Company's consolidated financial statements for a detailed discussion of NRG Yield, Inc.’s commitments and contingencies.
Note 4 — Dividends
Cash distributions paid to NRG Yield, Inc. by its subsidiary, NRG Yield LLC, were $69 million, $41 million and $5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

54

Exhibit 99.7
ITEM 1 — FINANCIAL STATEMENTS
NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 	Three months ended March 31,	
(In millions, except per share amounts)	2016 (a)	 	2015 (a)	
Operating Revenues	 	 	 	
Total operating revenues	$	234	
 	 	$	214	
 	
Operating Costs and Expenses	 	 	 	
Cost of operations	85	
 	 	86	
 	
Depreciation and amortization	74	
 	 	75	
 	
General and administrative	3	
 	 	3	
 	
Total operating costs and expenses	162	
 	 	164	
 	
Operating Income	72	
 	 	50	
 	
Other Income (Expense)	 	 	 	
Equity in earnings of unconsolidated affiliates	3	
 	 	3	
 	
Other income, net	—	
 	 	1	
 	
Interest expense	(74	)	 	(79	)	
Total other expense, net	(71	)	 	(75	)	
Income (Loss) Before Income Taxes	1	
 	 	(25	)	
Income tax benefit	—	
 	 	(4	)	
Net Income (Loss)	1	
 	 	(21	)	
Less: Pre-acquisition net loss of Drop Down Assets	(1	)	 	(5	)	
Net Income (Loss) Excluding Pre-acquisition Net Loss of Drop Down Assets	2	
 	 	(16	)	
Less: Net loss attributable to noncontrolling interests	(3	)	 	(11	)	
Net Income (Loss) Attributable to NRG Yield, Inc.	$	5	
 	 	$	(5	)	
Earnings (Loss) Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders	 	 	 	
Weighted average number of Class A common shares outstanding - basic and diluted	35	
 	 	35	
 	
Weighted average number of Class C common shares outstanding - basic and diluted	63	
 	 	35	
 	
Earnings (Loss) per Weighted Average Class A and Class C Common Share - Basic and Diluted	0.05	
 	 	(0.07	)	
Dividends Per Class A Common Share	$	0.225	
 	 	$	0.39	
 	
Dividends Per Class C Common Share	$	0.225	
 	 	N/A	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.
N/A - Not applicable.

See accompanying notes to consolidated financial statements.

1

                                            

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

 	Three months ended March 31,	
(In millions)	2016 (a)	 	2015 (a)	
Net Income (Loss)	$	1	
 	 	$	(21	)	
Other Comprehensive Loss, net of tax	 	 	 	
Unrealized loss on derivatives, net of income tax benefit of $9 and $8	(41	)	 	(20	)	
Other comprehensive loss	(41	)	 	(20	)	
Comprehensive Loss	(40	)	 	(41	)	
Less: Pre-acquisition net loss of Drop Down Assets	(1	)	 	(5	)	
Less: Comprehensive loss attributable to noncontrolling interests	(27	)	 	(18	)	
Comprehensive Loss Attributable to NRG Yield, Inc.	$	(12	)	 	$	(18	)	

 	
 	
(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

2

                                            

NRG YIELD, INC.
CONSOLIDATED BALANCE SHEETS

(In millions, except shares)	March 31, 2016 (a)	 	December 31, 2015 (a)	
ASSETS	(unaudited)	 	 	
Current Assets	 	 	 	
Cash and cash equivalents	$	76	
 	 	$	111	
 	
Restricted cash	108	
 	 	131	
 	
Accounts receivable — trade	91	
 	 	98	
 	
Accounts receivable — affiliate	2	
 	 	—	
 	
Inventory	35	
 	 	36	
 	
Notes receivable	17	
 	 	17	
 	
Prepayments and other current assets	21	
 	 	23	
 	
Total current assets	350	
 	 	416	
 	
Property, plant and equipment, net of accumulated depreciation of $855 and $782	5,834	
 	 	5,878	
 	
Other Assets	 	 	 	
Equity investments in affiliates	689	
 	 	697	
 	
Notes receivable	25	
 	 	30	
 	
Intangible assets, net of accumulated amortization of $111 and $93	1,338	
 	 	1,362	
 	
Deferred income taxes	180	
 	 	170	
 	
Other non-current assets	133	
 	 	136	
 	
Total other assets	2,365	
 	 	2,395	
 	
Total Assets	$	8,549	
 	 	$	8,689	
 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	
Current Liabilities	 	

Current portion of long-term debt	$	265	
 	 	$	264	
 	
Accounts payable — trade	26	
 	 	23	
 	
Accounts payable — affiliate	25	
 	 	86	
 	
Derivative instruments	38	
 	 	39	
 	
Accrued expenses and other current liabilities	56	
 	 	77	
 	
Total current liabilities	410	
 	 	489	
 	
Other Liabilities	 	 	 	
Long-term debt	5,274	
 	 	5,329	
 	
Accounts payable — affiliate	20	
 	 	—	
 	
Derivative instruments	110	
 	 	61	
 	
Other non-current liabilities	80	
 	 	72	
 	
Total non-current liabilities	5,484	
 	 	5,462	
 	
Total Liabilities	5,894	
 	 	5,951	
 	
Commitments and Contingencies	 	 	 	
Stockholders' Equity	 	 	 	
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued	—	
 	 	—	
 	
Class A, Class B, Class C and Class D common stock, $0.01 par value; 3,000,000,000 shares authorized (Class A 500,000,000, Class B 500,000,000, Class C 1,000,000,000, Class D 1,000,000,000); 182,848,000 shares issued and outstanding (Class A 34,586,250, Class B 42,738,750, Class C 62,784,250, Class D 42,738,750) at March 31, 2016, and December 31, 2015	1	
 	 	1	
 	
Additional paid-in capital	1,844	
 	 	1,855	
 	
Retained earnings	7	
 	 	12	
 	
Accumulated other comprehensive loss	(44	)	 	(27	)	
Noncontrolling interest	847	
 	 	897	
 	
Total Stockholders' Equity	2,655	
 	 	2,738	
 	
Total Liabilities and Stockholders' Equity	$	8,549	
 	 	$	8,689	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

3

                                            

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 	Three months ended March 31,	
 	2016 (a)	 	2015 (a)	
 	(In millions)	
Cash Flows from Operating Activities	 	 	 	
Net income (loss)	$	1	
 	 	$	(21	)	
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	 	 	 	
Equity in earnings from unconsolidated affiliates	(3	)	 	(3	)	
Distributions from unconsolidated affiliates	7	
 	 	26	
 	
Depreciation, amortization and accretion	75	
 	 	75	
 	
Amortization of financing costs and debt discounts	5	
 	 	3	
 	
Amortization of intangibles and out-of-market contracts	23	
 	 	12	
 	
Changes in income taxes	—	
 	 	(4	)	
Changes in derivative instruments	3	
 	 	(1	)	
Changes in prepaid and accrued capacity payments	(37	)	 	(37	)	
Changes in other working capital	15	
 	 	12	
 	
Net Cash Provided by Operating Activities	89	
 	 	62	
 	
Cash Flows from Investing Activities	 	 	 	
Acquisition of Drop Down Assets, net of cash acquired	—	
 	 	(490	)	
Capital expenditures	(7	)	 	(3	)	
Decrease in restricted cash	23	
 	 	34	
 	
Decrease in notes receivable	4	
 	 	4	
 	
Return of investment from unconsolidated affiliates	8	
 	 	3	
 	
Investments in unconsolidated affiliates	(51	)	 	—	
 	
Other	2	
 	 	—	
 	
Net Cash Used in Investing Activities	(21	)	 	(452	)	
Cash Flows from Financing Activities	 	 	 	
Net contributions from noncontrolling interests	10	
 	 	—	
 	
Distributions to NRG for NRG Wind TE Holdco	(4	)	 	—	
 	
Distributions to NRG from CVSR pre-acquisition	(11	)	 	(12	)	
Payment of dividends and distributions to shareholders	(41	)	 	(30	)	
Payments for long-term debt	(67	)	 	(58	)	
Net borrowings from the revolving credit facility	10	
 	 	195	
 	
Net Cash (Used in) Provided by Financing Activities	(103	)	 	95	
 	
Net Decrease in Cash and Cash Equivalents	(35	)	 	(295	)	
Cash and Cash Equivalents at Beginning of Period	111	
 	 	429	
 	
Cash and Cash Equivalents at End of Period	$	76	
 	 	$	134	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.
See accompanying notes to consolidated financial statements.

4

                                            

NRG YIELD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Nature of Business
NRG Yield, Inc., together with its consolidated subsidiaries, or the Company, is a dividend growth-oriented company formed by NRG as a Delaware corporation on December 20, 2012, to serve as the primary vehicle through which NRG owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. NRG Yield, Inc. owns 100% of the Class A units and Class C units of NRG Yield LLC, including a controlling interest through its position as managing member. NRG Yield LLC, through its wholly owned subsidiary, NRG Yield Operating LLC, is the holder of a portfolio of renewable and conventional generation and thermal infrastructure assets, primarily located in the Northeast, Southwest and California regions of the U.S.
The Company consolidates the results of NRG Yield LLC through its controlling interest, with NRG's interest shown as noncontrolling interest in the financial statements. On May 14, 2015, the Company completed a stock split in connection with which each outstanding share of Class A common stock was split into one share of Class A common stock and one share of Class C common stock, and each outstanding share of Class B common stock was split into one share of Class B common stock and one share of Class D common stock. The stock split is referred to as the Recapitalization and all references to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retrospectively adjusted to reflect the Recapitalization. In addition, on June 29, 2015, NRG Yield, Inc. completed the issuance of 28,198,000 shares of Class C common stock for net proceeds of $599 million. The holders of NRG Yield, Inc.'s outstanding shares of Class A and Class C common stock are entitled to dividends as declared. NRG receives its distributions from NRG Yield LLC through its ownership of NRG Yield LLC Class B and Class D units.
The following table represents the structure of the Company as of March 31, 2016:

5

                                            

As of March 31, 2016, the Company's operating assets are comprised of the following projects:

Projects	 	Percentage Ownership	 	Net Capacity (MW) (a)	 	Offtake Counterparty	 	Expiration	
Conventional	 	 	 	 	 	 	 	 	
El Segundo	 	100	%	 	550	
 	 	Southern California Edison	 	2023	
GenConn Devon	 	50	%	 	95	
 	 	Connecticut Light & Power	 	2040	
GenConn Middletown	 	50	%	 	95	
 	 	Connecticut Light & Power	 	2041	
Marsh Landing	 	100	%	 	720	
 	 	Pacific Gas and Electric	 	2023	
Walnut Creek	 	100	%	 	485	
 	 	Southern California Edison	 	2023	
 	 	 	 	1,945	
 	 	 	 	 	
Utility Scale Solar	 	 	 	 	 	 	 	 	
Alpine	 	100	%	 	66	
 	 	Pacific Gas and Electric	 	2033	
Avenal	 	50	%	 	23	
 	 	Pacific Gas and Electric	 	2031	
Avra Valley	 	100	%	 	26	
 	 	Tucson Electric Power	 	2032	
Blythe	 	100	%	 	21	
 	 	Southern California Edison	 	2029	
Borrego	 	100	%	 	26	
 	 	San Diego Gas and Electric	 	2038	
CVSR	 	100	%	 	250	
 	 	Pacific Gas and Electric	 	2038	
Desert Sunlight 250	 	25	%	 	63	
 	 	Southern California Edison	 	2035	
Desert Sunlight 300	 	25	%	 	75	
 	 	Pacific Gas and Electric	 	2040	
Kansas South	 	100	%	 	20	
 	 	Pacific Gas and Electric	 	2033	
Roadrunner	 	100	%	 	20	
 	 	El Paso Electric	 	2031	
TA High Desert	 	100	%	 	20	
 	 	Southern California Edison	 	2033	
 	 	 	 	610	
 	 	 	 	 	
Distributed Solar	 	 	 	 	 	 	 	 	
AZ DG Solar Projects	 	100	%	 	5	
 	 	Various	 	2025 - 2033	
PFMG DG Solar Projects	 	51	%	 	4	
 	 	Various	 	2032	
 	 	 	 	9	
 	 	 	 	 	
Wind	 	 	 	 	 	 	 	 	
Alta I	 	100	%	 	150	
 	 	Southern California Edison	 	2035	
Alta II	 	100	%	 	150	
 	 	Southern California Edison	 	2035	
Alta III	 	100	%	 	150	
 	 	Southern California Edison	 	2035	
Alta IV	 	100	%	 	102	
 	 	Southern California Edison	 	2035	
Alta V	 	100	%	 	168	
 	 	Southern California Edison	 	2035	
Alta X (b)	 	100	%	 	137	
 	 	Southern California Edison	 	2038	
Alta XI (b)	 	100	%	 	90	
 	 	Southern California Edison	 	2038	
Buffalo Bear	 	100	%	 	19	
 	 	Western Farmers Electric Co-operative	 	2033	
Crosswinds	 	74.3	%	 	16	
 	 	Corn Belt Power Cooperative	 	2027	
Elbow Creek	 	75	%	 	92	
 	 	NRG Power Marketing LLC	 	2022	
Elkhorn Ridge	 	50.3	%	 	41	
 	 	Nebraska Public Power District	 	2029	
Forward	 	75	%	 	22	
 	 	Constellation NewEnergy, Inc.	 	2017	
Goat Wind	 	74.9	%	 	113	
 	 	Dow Pipeline Company	 	2025	
Hardin	 	74.3	%	 	11	
 	 	Interstate Power and Light Company	 	2027	
Laredo Ridge	 	100	%	 	80	
 	 	Nebraska Public Power District	 	2031	
Lookout	 	75	%	 	29	
 	 	Southern Maryland Electric Cooperative	 	2030	
Odin	 	74.9	%	 	15	
 	 	Missouri River Energy Services	 	2028	
Pinnacle	 	100	%	 	55	
 	 	Maryland Department of General Services and University System of Maryland	 	2031	
San Juan Mesa	 	56.3	%	 	68	
 	 	Southwestern Public Service Company	 	2025	
Sleeping Bear	 	75	%	 	71	
 	 	Public Service Company of Oklahoma	 	2032	
South Trent	 	100	%	 	101	
 	 	AEP Energy Partners	 	2029	
Spanish Fork	 	75	%	 	14	
 	 	PacifiCorp	 	2028	
Spring Canyon II (b)	 	90.1	%	 	29	
 	 	Platte River Power Authority	 	2039	
Spring Canyon III (b)	 	90.1	%	 	25	
 	 	Platte River Power Authority	 	2039	
Taloga	 	100	%	 	130	
 	 	Oklahoma Gas & Electric	 	2031	
Wildorado	 	74.9	%	 	121	
 	 	Southwestern Public Service Company	 	2027	
 	 	 	 	1,999	

6

                                            

 	 	 	 	 	 	 	 	 	 	 	
Projects	 	Percentage Ownership	 	Net Capacity (MW) (a)	 	Offtake Counterparty	 	Expiration	
Thermal	 	 	 	 	 	 	 	 	
Thermal equivalent MWt (c)	 	100	%	 	1,315	
 	 	Various	 	Various	
Thermal generation	 	100	%	 	124	
 	 	Various	 	Various	
Total net capacity (excluding equivalent MWt)(d)	 	 	 	4,687	

 	

(a) Net capacity represents the maximum, or rated, generating capacity of the facility multiplied by the Company's percentage ownership in the facility as of March 31, 2016.
(b)  Projects are part of tax equity arrangements.
(c)  For thermal energy, net capacity represents MWt for steam or chilled water and excludes 134 MWt available under the right-to-use provisions contained in agreements between two of the Company's thermal facilities and certain of its customers.
(d)  Total net capacity excludes 57 MW for RPV Holdco and 45 MW for DGPV Holdco, which are consolidated by NRG, as further described in Note 5,  Variable Interest Entities, or VIEs .

Substantially all of the Company's generation assets are under long-term contractual arrangements for the output or capacity from these assets. The thermal assets are comprised of district energy systems and combined heat and power plants that produce steam, hot water and/or chilled water and in some instances, electricity at a central plant. Three of the district energy systems are subject to rate regulation by state public utility commissions while the other district energy systems have rates determined by negotiated bilateral contracts.
As described in Note 12, Related Party Transactions, the Company entered into a management services agreement with NRG for various services, including human resources, accounting, tax, legal, information systems, treasury, and risk management.
Stockholders' equity represents the equity associated with the Class A and Class C common stockholders, with the equity associated with the Class B and Class D common stockholder, NRG, and the third-party interests under certain tax equity arrangements classified as noncontrolling interest.
As described in Note 3, Business Acquisitions, on November 3, 2015, the Company acquired 75% of the Class B interests of NRG Wind TE Holdco, or the November 2015 Drop Down Assets, from NRG for cash consideration of $209 million. In February 2016, NRG made a final working capital payment of $2 million, reducing total cash consideration to $207 million. Additionally, on January 2, 2015, the Company acquired the Laredo Ridge, Tapestry, and Walnut Creek projects, or the January 2015 Drop Down Assets, for total cash consideration of $489 million, including $9 million for working capital. In addition, as described in Note 3,  Business Acquisitions , the Company acquired the remaining 51.05% of CVSR, or the CVSR Drop Down, on September 1, 2016, for cash consideration of $78.5 million. The CVSR Drop Down, the November 2015 Drop Down Assets and the January 2015 Drop Down Assets, or collectively, the Drop Down Assets, were accounted for as transfers of entities under common control. The accounting guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Accordingly, the Company prepared its consolidated financial statements to reflect the transfers as if they had taken place from the beginning of the financial statements period or from the date the entities were under common control (if later than the beginning of the financial statements period), which was April 1, 2014 for the January Drop Down Assets and the majority of the November 2015 Drop Down Assets. The recast did not affect net income attributable to NRG Yield, Inc., weighted average number of shares outstanding, earnings per share or dividends. With respect to the November 2015 Drop Down Assets, the Company has recorded all minority interests in NRG Wind TE Holdco as noncontrolling interest in the Consolidated Financial Statements for all periods presented.
With respect to the CVSR Drop Down, prior to the transaction, the Company recorded its 48.95% interest in CVSR as an equity method investment. In connection with the retrospective adjustment of prior periods, the Company has removed the equity method investment from all prior periods and adjusted its financial statements to reflect its results of operations, financial position and cash flows as if it had consolidated CVSR from the beginning of the financial statement period.
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the SEC’s regulations for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. 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 audited consolidated financial statements for the year ended December 31, 2015. Interim results are not necessarily indicative of results for a full year.
In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company's consolidated financial position as of March 31, 2016, and the results of operations, comprehensive income and cash flows for the three months ended March 31, 2016, and 2015.

7

                                            

Note 2 — Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during the reporting period. Actual results could be different from these estimates.
Noncontrolling Interests
The following table reflects the changes in the Company's noncontrolling interest balance:

 	(In millions)	
Balance as of December 31, 2015	$	897	
 	
Capital contributions from tax equity investors, net of distributions	10	
 	
November 2015 Drop Down Assets working capital payment	2	
 	
Comprehensive loss	(27	)	
Distributions to NRG	(34	)	
Pre-acquisition net loss of Drop Down assets	(1	)	
Balance as of March 31, 2016	$	847	
 	
Distributions to NRG
The following table lists the distributions paid on NRG Yield LLC's Class B and D units during the three months ended March 31, 2016:

 	First Quarter 2016	
Distributions per Class B Unit	$	0.225	
 	
Distributions per Class D Unit	$	0.225	
 	
On April 26, 2016, NRG Yield LLC declared a distribution on its units of $0.23 per unit payable on June 15, 2016 to unit holders of record as of June 1, 2016. The portion of the distributions paid by NRG Yield LLC to NRG is recorded as a reduction to the Company's noncontrolling interest balance.
On July 26, 2016, NRG Yield LLC declared a distribution on its units of $0.24 per unit payable on September 15, 2016 to unit holders of record as of September 1, 2016. The portion of the distributions paid by NRG Yield LLC to NRG is recorded as a reduction to the Company's noncontrolling interest balance.
Additionally, the Company paid $4 million to NRG relating to its noncontrolling interest in NRG Wind TE Holdco for the three months ended March 31, 2016.
NRG Indemnity Receivable
As of March 31, 2016, $75 million remains receivable as the balance is expected to be fully recovered from the current litigation with SunPower pursuant to the existing indemnity on the project. In addition, during the first quarter of 2016, CVSR recorded a payable to SunPower for $7 million that SunPower overpaid for liquidated damages pursuant to the project indemnities with a corresponding increase to the related property, plant and equipment.
The agreement between NRG and the Company for the CVSR Drop Down specified that all amounts related to the litigation with SunPower are excluded from the acquisition. Accordingly, prior to close of the transaction, the $75 million receivable and $7 million payable were transferred to NRG as a net reduction to its ownership interest in CVSR.
Recent Accounting Developments
ASU 2016-07 — In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures  (Topic 323), or ASU No. 2016-07. The amendments of ASU No. 2016-07 eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must

8

                                            

adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting with no retroactive adjustment to the investment. In addition, ASU No. 2016-07 requires that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The guidance in ASU No. 2016-07 is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. The adoption of ASU No. 2016-07 is required to be applied prospectively and early adoption is permitted. The Company does not expect the standard to have a material impact on its results of operations, cash flows and financial position.
ASU 2016-02 — In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), or ASU No. 2016-02. The amendments of ASU No. 2016-02 complete the joint effort between the FASB and the International Accounting Standards Board, or IASB, to develop a common leasing standard for U.S. GAAP and International Financial Reporting Standards, or IFRS, with the objective to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and to improve financial reporting. The guidance in ASU No. 2016-02 provides that a lessee that may have previously accounted for a lease as an operating lease under current GAAP should recognize the assets and liabilities that arise from a lease on the balance sheet. In addition, ASU No. 2016-02 expands the required quantitative and qualitative disclosures with regards to lease arrangements. The guidance in ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. The adoption of ASU No. 2016-02 is required to be applied using a modified retrospective approach for the earliest period presented and early adoption is permitted. The Company is currently evaluating the impact of the standard on the Company's results of operations, cash flows and financial position.
ASU 2016-01 — In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , or ASU No. 2016-01. The amendments of ASU No. 2016-01 eliminate available-for-sale classification of equity investments and require that equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be generally measured at fair value with changes in fair value recognized in net income.  Further, the amendments require financial assets and financial liabilities to be presented separately in the notes to the financial statements, grouped by measurement category and form of financial asset.  The guidance in ASU No. 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those annual periods. The Company is currently evaluating the impact of the standard on the Company's results of operations, cash flows and financial position.
ASU 2015-16 — In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments , or ASU No. 2015-16. The amendments of ASU No. 2015-16 require that an acquirer recognize measurement period adjustments to the provisional amounts recognized in a business combination in the reporting period during which the adjustments are determined. Additionally, the amendments of ASU No. 2015-16 require the acquirer to record in the same period's financial statements the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the measurement period adjustment, calculated as if the accounting had been completed at the acquisition date as well as disclosing on either the face of the income statement or in the notes the portion of the amount recorded in current period earnings that would have been recorded in previous reporting periods. The guidance in ASU No. 2015-16 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The amendments should be applied prospectively. The Company adopted this standard on January 1, 2016, and the adoption of this standard did not impact the Company's results of operations, cash flows or financial position. 
ASU 2014-09 — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU No. 2014-09.  The amendments of ASU No. 2014-09 complete the joint effort between the FASB and the International Accounting Standards Board, or IASB, to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards, or IFRS, and to improve financial reporting.  The guidance in ASU No. 2014-09 provides that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for the goods or services provided and establishes the following steps to be applied by an entity: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies the performance obligation.  In August 2015, the FASB issued ASU 2015-14, which formally deferred the effective date by one year to make the guidance of ASU No. 2014-09 effective for annual reporting periods beginning after December 15, 2017, including interim periods therein.  Early adoption is permitted, but not prior to the original effective date, which was for annual reporting periods beginning after December 15, 2016.  The Company is currently evaluating the impact of the standard on the Company's results of operations, cash flows and financial position. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606), or ASU No. 2016-10.  The amendments of ASU No. 2016-10 provide further

9

                                            

clarification on contract revenue recognition as updated by ASU No. 2014-09, specifically related to the identification of separately identifiable performance obligations and the implementation of licensing contracts.   
Note 3 — Business Acquisitions
2016 Acquisitions
CVSR Drop Down from NRG — On September 1, 2016, the Company acquired the remaining 51.05% interest of CVSR Holdco LLC, which indirectly owns the CVSR solar facility, from NRG, or the CVSR Drop Down, for total cash consideration of $78.5 million, subject to working capital adjustments plus assumed non-recourse project debt. The acquisition was funded with cash on hand.
The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50,  Business Combinations - Related Issues . The difference between the cash paid and historical value of the entities' equity was recorded as a contribution from NRG with the offset to noncontrolling interest. Because the transaction constituted a transfer of net assets under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Prior to the transaction, the Company recorded its 48.95% interest in CVSR as an equity method investment. In connection with the retrospective adjustment of prior periods, the Company has removed the equity method investment from all prior periods and adjusted its financial statements to reflect its results of operations, financial position and cash flows as if it had consolidated CVSR from the beginning of the financial statement period.
In connection with the acquisition and prior to close of the transaction, a $68 million receivable resulting from the litigation with SunPower was transferred to NRG as a reduction to its ownership interest in the Company.
2015 Acquisitions
November 2015 Drop Down Assets from NRG — On November 3, 2015, the Company acquired the November 2015 Drop Down Assets, a portfolio of 12 wind facilities totaling 814 net MW, from NRG for cash consideration of $209 million, subject to working capital adjustments. In February 2016, NRG made a final working capital payment of $2 million, reducing total cash consideration to $207 million. The Company is responsible for its pro-rata share of non-recourse project debt of $193 million and noncontrolling interest associated with a tax equity structure of $159 million (as of the acquisition date).
The Company funded the acquisition with borrowings from its revolving credit facility. The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost. The difference between the cash paid and historical value of the entities' equity was recorded as a distribution from NRG with the offset to noncontrolling interest.
The Class A interests of NRG Wind TE Holdco are owned by a tax equity investor, or TE Investor, who receives 99% of allocations of taxable income and other items until the flip point, which occurs when the TE Investor obtains a specified return on its initial investment, at which time the allocations to the TE Investor change to 8.53%. The Company generally receives 75% of CAFD until the flip point, at which time the allocations to the Company of CAFD change to 68.60%. If the flip point has not occurred by a specified date, 100% of CAFD is allocated to the TE Investor until the flip point occurs. NRG Wind TE Holdco is a VIE and the Company is the primary beneficiary, through its position as managing member, and consolidates NRG Wind TE Holdco.
Desert Sunlight — On June 29, 2015, the Company acquired 25% of the membership interest in Desert Sunlight Investment Holdings, LLC, which owns two solar photovoltaic facilities that total 550 MW, located in Desert Center, California from EFS Desert Sun, LLC, an affiliate of GE Energy Financial Services for a purchase price of $285 million. Power generated by the facilities is sold to Southern California Edison and Pacific Gas and Electric under long-term PPAs with approximately 20 years and 25 years of remaining contract life, respectively. The Company accounts for its 25% investment as an equity method investment.
Spring Canyon — On May 7, 2015, the Company acquired a 90.1% interest in Spring Canyon II, a 32 MW wind facility, and Spring Canyon III, a 28 MW wind facility, each located in Logan County, Colorado, from Invenergy Wind Global LLC. The purchase price was funded with cash on hand. Power generated by Spring Canyon II and Spring Canyon III is sold to Platte River Power Authority under long-term PPAs with approximately 24 years of remaining contract life.
University of Bridgeport Fuel Cell— On April 30, 2015, the Company completed the acquisition of the University of Bridgeport Fuel Cell project in Bridgeport, Connecticut from FuelCell Energy, Inc. The project added an additional 1.4 MW of thermal capacity to the Company's portfolio, with a 12-year contract, with the option for a 7-year extension. The acquisition is reflected in the Company's Thermal segment.

10

                                            

January 2015 Drop Down Assets from NRG — On January 2, 2015, the Company acquired the following projects from NRG: (i) Laredo Ridge, an 80 MW wind facility located in Petersburg, Nebraska, (ii) Tapestry, which includes Buffalo Bear, a 19 MW wind facility in Buffalo, Oklahoma; Taloga, a 130 MW wind facility in Putnam, Oklahoma; and Pinnacle, a 55 MW wind facility in Keyser, West Virginia, and (iii)  Walnut Creek, a 485 MW natural gas facility located in City of Industry, California, for total cash consideration of $489 million, including $9 million for working capital, plus assumed project-level debt of $737 million. The Company funded the acquisition with cash on hand and drawings under its revolving credit facility. The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost. The difference between the cash paid and the historical value of the entities' equity of $61 million, as well as $23 million of AOCL, was recorded as a distribution to NRG and reduced the balance of its noncontrolling interest.

Note 4 — Property, Plant and Equipment
The Company’s major classes of property, plant, and equipment were as follows:

 	March 31, 2016	 	December 31, 2015	 	Depreciable Lives	
 	(In millions)	 	 	
Facilities and equipment	$	6,492	
 	 	$	6,480	
 	 	2 - 40 Years	
Land and improvements	171	
 	 	171	
 	 	 	
Construction in progress	26	
 	 	9	
 	 	 	
Total property, plant and equipment	6,689	
 	 	6,660	
 	 	 	
Accumulated depreciation	(855	)	 	(782	)	 	 	
Net property, plant and equipment	$	5,834	
 	 	$	5,878	

Note 5 — Variable Interest Entities, or VIEs
Entities that are Consolidated
The Company has a controlling financial interest in certain entities which have been identified as VIEs under ASC 810, Consolidations,  or ASC 810. These arrangements are primarily related to tax equity arrangements entered into with third parties in order to monetize certain tax credits associated with wind facilities, as further described in Note 5,  Investments Accounted for by the Equity Method and Variable Interest Entities,  to the Company's audited consolidated financial statements included in the 2015 Form 10-K.
Summarized financial information for the Company's consolidated VIEs consisted of the following as of March 31, 2016:

(In millions)	NRG Wind TE Holdco	 	Alta Wind TE Holdco	 	Spring Canyon	
Other current and non-current assets	$	205	
 	 	$	21	
 	 	$	4	
 	
Property, plant and equipment	651	
 	 	478	
 	 	104	
 	
Intangible assets	2	
 	 	284	
 	 	—	
 	
Total assets	858	
 	 	783	
 	 	108	
 	
Current and non-current liabilities	226	
 	 	8	
 	 	7	
 	
Total liabilities	226	
 	 	8	
 	 	7	
 	
Noncontrolling interest	260	
 	 	123	
 	 	71	
 	
Net assets less noncontrolling interests	$	372	
 	 	$	652	
 	 	$	30	

11

                                            

Entities that are not Consolidated
The Company has interests in entities that are considered VIEs under ASC 810, but for which it is not considered the primary beneficiary.  The Company accounts for its interests in these entities under the equity method of accounting, as further described in Note 5,  Investments Accounted for by the Equity Method and Variable Interest Entities,  to the Company's audited consolidated financial statements included in the 2015 Form 10-K.
NRG DGPV Holdco 1 LLC — The Company and NRG, maintain a partnership, NRG DGPV Holdco 1 LLC, or DGPV Holdco 1, the purpose of which is to own or purchase solar power generation projects and other ancillary related assets from NRG Renew LLC or its subsidiaries, via intermediate funds, including: (i) a tax equity-financed portfolio of 10 recently completed community solar projects representing approximately 8 MW with a weighted average remaining PPA term of 20 years; and (ii) a tax equity-financed portfolio of approximately 12 commercial photovoltaic systems representing approximately 37 MW with a weighted average remaining PPA term of 19 years. Both of these investments relate to the Company's $100 million commitment to distributed solar projects in partnership with NRG. The Company's maximum exposure to loss is limited to its equity investment, which was $74 million as of March 31, 2016.
NRG DGPV Holdco 2 LLC — On February 29, 2016,the Company and NRG entered into an additional partnership by forming NRG DGPV Holdco 2 LLC, or DGPV Holdco 2, to own or purchase solar power generation projects and other ancillary related assets from NRG Renew LLC or its subsidiaries, via intermediate funds.  Under this partnership, the Company committed to fund up to $50 million of capital. 
NRG RPV Holdco 1 LLC — The Company and NRG Residential Solar Solutions LLC, a subsidiary of NRG, maintain a partnership, NRG RPV Holdco 1 LLC, or RPV Holdco, that holds operating portfolios of residential solar assets developed by NRG Home Solar, a subsidiary of NRG, including: (i) an existing, unlevered portfolio of over 2,200 leases across nine states representing approximately 17 MW with a weighted average remaining lease term of approximately 17 years; and (ii) a tax equity-financed portfolio of approximately 5,700 leases representing approximately 40 MW, with an average lease term for the existing and new leases of approximately 17 to 20 years. Under this partnership, the Company had previously committed to fund up to $150 million of capital, which was reduced to $100 million in February 2016. The Company's maximum exposure to loss is limited to its equity investment, which was $63 million as of March 31, 2016.
On August 5, 2016, the Company and NRG amended the RPV Holdco partnership to further reduce the aggregate commitment of $100 million to $60 million in connection with NRG’s change in business model approach in the residential solar business.
GenConn Energy LLC — The Company has a 50% interest in GCE Holding LLC, the owner of GenConn, which owns and operates two 190 MW peaking generation facilities in Connecticut at the Devon and Middletown sites. As of March 31, 2016, the Company's investment in GenConn was $108 million and its maximum exposure to loss is limited to its equity investment.
The following table presents summarized financial information for GCE Holding LLC:

 	Three months ended March 31,	
(In millions)	2016	 	2015	
Income Statement Data:	 	
Operating revenues	$	18	
 	 	$	22	
 	
Operating income	9	
 	 	9	
 	
Net income	$	7	
 	 	$	6	

 	
 	 	 	 	 	 	 	 	
 	March 31, 2016	 	December 31, 2015	
Balance Sheet Data:	(In millions)	
Current assets	$	29	
 	 	$	36	
 	
Non-current assets	411	
 	 	416	
 	
Current liabilities	13	
 	 	16	
 	
Non-current liabilities	211	
 	 	215	

12

                                            

Note 6 — Fair Value of Financial Instruments
Fair Value Accounting under ASC 820
ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
 	 	
•	Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.	
 	 	
•	Level 2—inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.	
 	 	
•	Level 3—unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.	
In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement.
For cash and cash equivalents, restricted cash, accounts receivable, accounts receivable — affiliate, accounts payable, accounts payable — affiliate, accrued expenses and other liabilities, the carrying amounts approximate fair value because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.
The estimated carrying amounts and fair values of the Company’s recorded financial instruments not carried at fair market value are as follows:

 	As of March 31, 2016	 	As of December 31, 2015	
 	Carrying Amount	 	Fair Value	 	Carrying Amount	 	Fair Value	
(In millions)	 	
Assets:	 	 	 	 	 	 	 	
Notes receivable, including current portion	$	42	
 	 	$	42	
 	 	$	47	
 	 	$	47	
 	
Liabilities:	 	 	 	 	 	 	 	
Long-term debt, including current portion	$	5,601	
 	 	$	5,543	
 	 	$	5,656	
 	 	$	5,538	
 	
The fair value of notes receivable and long-term debt are based on expected future cash flows discounted at market interest rates, or current interest rates for similar instruments, and are classified as Level 3 within the fair value hierarchy.
Recurring Fair Value Measurements
The Company records its derivative assets and liabilities at fair value on its consolidated balance sheet. There were no derivative asset positions on the consolidated balance sheet as of March 31, 2016, and December 31, 2015. The following table presents liabilities measured and recorded at fair value on the Company's consolidated balance sheets on a recurring basis and their level within the fair value hierarchy:

 	As of March 31, 2016	 	As of December 31, 2015	
 	Fair Value (a)	 	Fair Value (a)	
(In millions)	Level 2	 	Level 2	
Derivative liabilities:	 	 	 	
Commodity contracts	2	
 	 	2	
 	
Interest rate contracts	146	
 	 	98	
 	
Total liabilities	$	148	
 	 	$	100	

 	

(a)  There were no assets or liabilities classified as Level 1 or Level 3 as of March 31, 2016, and December 31, 2015.

13

                                            

Derivative Fair Value Measurements
The Company's contracts are non-exchange-traded and valued using prices provided by external sources. For the Company’s energy markets, management receives quotes from multiple sources. To the extent that multiple quotes are received, the prices reflect the average of the bid-ask mid-point prices obtained from all sources believed to provide the most liquid market for the commodity.
The fair value of each contract is discounted using a risk free interest rate. In addition, a credit reserve is applied to reflect credit risk, which is, for interest rate swaps, calculated based on credit default swaps using the bilateral method. For commodities, to the extent that the net exposure under a specific master agreement is an asset, the Company uses the counterparty’s default swap rate. If the net exposure under a specific master agreement is a liability, the Company uses NRG's default swap rate. For interest rate swaps and commodities, the credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the liabilities or that a market participant would be willing to pay for the assets. As of March 31, 2016, the credit reserve resulted in a $3 million increase in fair value, which was composed of a $2 million gain in OCI and $1 million gain in interest expense. It is possible that future market prices could vary from those used in recording assets and liabilities and such variations could be material.
Concentration of Credit Risk
In addition to the credit risk discussion in Note 2, Summary of Significant Accounting Policies,to the Company's audited consolidated financial statements included in the Company's 2015 Form 10-K , the following is a discussion of the concentration of credit risk for the Company's financial instruments. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. The Company monitors and manages credit risk through credit policies that include: (i) an established credit approval process; (ii) daily monitoring of counterparties' credit limits; (iii) the use of credit mitigation measures such as margin, collateral, prepayment arrangements, or volumetric limits; (iv) the use of payment netting agreements; and (v) the use of master netting agreements that allow for the netting of positive and negative exposures of various contracts associated with a single counterparty. Risks surrounding counterparty performance and credit could ultimately impact the amount and timing of expected cash flows. The Company seeks to mitigate counterparty risk by having a diversified portfolio of counterparties.
Counterparty credit exposure includes credit risk exposure under certain long-term agreements, including solar and other PPAs. As external sources or observable market quotes are not available to estimate such exposure, the Company estimates the exposure related to these contracts based on various techniques including, but not limited to, internal models based on a fundamental analysis of the market and extrapolation of observable market data with similar characteristics. Based on these valuation techniques, as of March 31, 2016, credit risk exposure to these counterparties attributable to the Company's ownership interests was approximately $2.9 billion for the next five years. The majority of these power contracts are with utilities with strong credit quality and public utility commission or other regulatory support, as further described in Note 12,  Segment Reporting ,  to the Company's audited consolidated financial statements included in the Company's 2015 Form 10-K.   However, such regulated utility counterparties can be impacted by changes in government regulations, which the Company is unable to predict.
Note 7 — Accounting for Derivative Instruments and Hedging Activities
This footnote should be read in conjunction with the complete description under Note 7, Accounting for Derivative Instruments and Hedging Activities , to the Company's audited consolidated financial statements included in the Company's 2015 Form 10-K .
Energy-Related Commodities
As of March 31, 2016, the Company had forward contracts for the purchase of fuel commodities relating to the forecasted usage of the Company’s district energy centers extending through 2018. At March 31, 2016, these contracts were not designated as cash flow or fair value hedges.

Interest Rate Swaps
As of March 31, 2016, the Company had interest rate derivative instruments on non-recourse debt extending through 2031, most of which are designated as cash flow hedges.

14

                                            

Volumetric Underlying Derivative Transactions
The following table summarizes the net notional volume buy/(sell) of the Company's open derivative transactions broken out by commodity as of March 31, 2016 and December 31, 2015.

 	 	 	Total Volume	
 	 	 	March 31, 2016	 	December 31, 2015	
Commodity	Units	 	(In millions)	
Natural Gas	MMBtu	 	3	
 	 	4	
 	
Interest	Dollars	 	$	1,952	
 	 	$	1,991	
 	
Fair Value of Derivative Instruments
There were no derivative asset positions on the balance sheet as of March 31, 2016, and December 31, 2015. The following table summarizes the fair value within the derivative instrument valuation on the balance sheet:

 	Fair Value	
 	Derivative Liabilities	
 	March 31, 2016	 	December 31, 2015	
 	(In millions)	
Derivatives Designated as Cash Flow Hedges:	 	 	 	
Interest rate contracts current	$	33	
 	 	$	34	
 	
Interest rate contracts long-term	98	
 	 	56	
 	
Total Derivatives Designated as Cash Flow Hedges	131	
 	 	90	
 	
Derivatives Not Designated as Cash Flow Hedges:	 	 	 	
Interest rate contracts current	3	
 	 	3	
 	
Interest rate contracts long-term	12	
 	 	5	
 	
Commodity contracts current	2	
 	 	2	
 	
Total Derivatives Not Designated as Cash Flow Hedges	17	
 	 	10	
 	
Total Derivatives	$	148	
 	 	$	100	
 	
The Company has elected to present derivative assets and liabilities on the balance sheet on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. As of March 31, 2016, and December 31, 2015, there were no offsetting amounts at the counterparty master agreement level or outstanding collateral paid or received.

 	

 	
 	
Accumulated Other Comprehensive Loss
The following table summarizes the effects on the Company’s accumulated OCL balance attributable to interest rate swaps designated as cash flow hedge derivatives, net of tax:

 	Three months ended March 31,	
 	2016	 	2015	
 	(In millions)	
Accumulated OCL beginning balance	$	(83	)	 	$	(76	)	
Reclassified from accumulated OCL to income due to realization of previously deferred amounts	3	
 	 	3	
 	
Mark-to-market of cash flow hedge accounting contracts	(44	)	 	(23	)	
Accumulated OCL ending balance, net of income tax benefit of $25 and $14, respectively	$	(124	)	 	$	(96	)	
Accumulated OCL attributable to noncontrolling interests	(80	)	 	(73	)	
Accumulated OCL attributable to NRG Yield, Inc.	$	(44	)	 	$	(23	)	
Losses expected to be realized from OCL during the next 12 months, net of income tax benefit of $4	$	17	
 	 	 	
Amounts reclassified from accumulated OCL into income and amounts recognized in income from the ineffective portion of cash flow hedges are recorded to interest expense. There was no ineffectiveness for the three months ended March 31, 2016, and 2015.

15

                                            

Impact of Derivative Instruments on the Statements of Operations
The Company has interest rate derivative instruments that are not designated as cash flow hedges. The effect of interest rate hedges is recorded to interest expense. For the three months ended March 31, 2016, and 2015, the impact to the consolidated statements of operations was a loss of $7 million and $12 million, respectively.

A portion of the Company’s derivative commodity contracts relates to its Thermal Business for the purchase of fuel commodities based on the forecasted usage of the thermal district energy centers. Realized gains and losses on these contracts are reflected in the fuel costs that are permitted to be billed to customers through the related customer contracts or tariffs and, accordingly, no gains or losses are reflected in the consolidated statements of operations for these contracts.
Commodity contracts also hedged the forecasted sale of power for Alta X and Alta XI in 2015 until the start of the PPAs on January 1, 2016. The effect of these commodity hedges was recorded to operating revenues. For the three months ended March 31, 2015, the impact to the consolidated statements of operations was an unrealized gain of $7 million.
See Note 6, Fair Value of Financial Instruments, for a discussion regarding concentration of credit risk.

16

                                            

Note 8 — Long-term Debt
This footnote should be read in conjunction with the complete description under Note 9, Long-term Debt, to the Company's audited consolidated financial statements included in the 2015 Form 10-K. Long-term debt consisted of the following:

 	March 31, 2016	 	December 31, 2015	 	March 31, 2016, interest rate %  (a)	 	Letters of Credit Outstanding at March 31, 2016	
 	(In millions, except rates)	 	 	
2019 Convertible Notes (b)	$	332	
 	 	$	330	
 	 	3.500	 	 	
2020 Convertible Notes (c)	267	
 	 	266	
 	 	3.250	 	 	
2024 Senior Notes	500	
 	 	500	
 	 	5.375	 	 	
NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility, due 2019  (d)	316	
 	 	306	
 	 	L+2.75	 	60	
 	
Project-level debt:	 	 	 	 	 	 	 	
Alpine, due 2022	153	
 	 	154	
 	 	L+1.75	 	37	
 	
Alta Wind I, lease financing arrangement, due 2034	252	
 	 	252	
 	 	7.015	 	16	
 	
Alta Wind II, lease financing arrangement, due 2034	198	
 	 	198	
 	 	5.696	 	28	
 	
Alta Wind III, lease financing arrangement, due 2034	206	
 	 	206	
 	 	6.067	 	28	
 	
Alta Wind IV, lease financing arrangement, due 2034	133	
 	 	133	
 	 	5.938	 	19	
 	
Alta Wind V, lease financing arrangement, due 2035	213	
 	 	213	
 	 	6.071	 	31	
 	
Alta Realty Investments, due 2031	32	
 	 	33	
 	 	7.000	 	—	
 	
Alta Wind Asset Management, due 2031	19	
 	 	19	
 	 	L+2.375	 	—	
 	
Avra Valley, due 2031	59	
 	 	60	
 	 	L+1.75	 	3	
 	
Blythe, due 2028	21	
 	 	21	
 	 	L+1.625	 	6	
 	
Borrego, due 2025 and 2038	72	
 	 	72	
 	 	L+ 2.50/5.65	 	5	
 	
CVSR, due 2037	780	
 	 	793	
 	 	2.339 - 3.775	 	—	
 	
El Segundo Energy Center, due 2023	457	
 	 	485	
 	 	L+1.625 - L+2.25	 	82	
 	
Energy Center Minneapolis, due 2017 and 2025	107	
 	 	108	
 	 	5.95 -7.25	 	—	
 	
Kansas South, due 2031	32	
 	 	33	
 	 	L+2.00	 	4	
 	
Laredo Ridge, due 2028	103	
 	 	104	
 	 	L+1.875	 	10	
 	
Marsh Landing, due 2017 and 2023	410	
 	 	418	
 	 	L+1.75 - L+1.875	 	36	
 	
PFMG and related subsidiaries financing agreement, due 2030	29	
 	 	29	
 	 	6.000	 	—	
 	
Roadrunner, due 2031	39	
 	 	40	
 	 	L+1.625	 	5	
 	
South Trent Wind, due 2020	61	
 	 	62	
 	 	L+1.625	 	10	
 	
TA High Desert, due 2020 and 2032	52	
 	 	52	
 	 	L+2.50/5.15	 	8	
 	
Tapestry, due 2021	178	
 	 	181	
 	 	L+1.625	 	20	
 	
Viento, due 2023	189	
 	 	189	
 	 	L+2.75	 	27	
 	
Walnut Creek, due 2023	344	
 	 	351	
 	 	L+1.625	 	52	
 	
WCEP Holdings, due 2023	46	
 	 	46	
 	 	L+3.00	 	—	
 	
Other	1	
 	 	2	
 	 	various	 	—	
 	
Subtotal project-level debt:	4,186	
 	 	4,254	
 	 	 	 	 	
Total debt	5,601	
 	 	5,656	
 	 	 	 	 	
   Less current maturities	265	
 	 	264	
 	 	 	 	 	
Less deferred financing costs	62	
 	 	63	
 	 	 	 	 	
Total long-term debt	$	5,274	
 	 	$	5,329	

 	

(a)  As of March 31, 2016, L+ equals 3 month LIBOR plus x%, except for the NRG Marsh Landing term loan, Walnut Creek term loan, and NRG Yield LLC and Yield Operating LLC Revolving Credit Facility, where L+ equals 1 month LIBOR plus x% and Kansas South, where L+ equals 6 month LIBOR plus x%.
(b)  Net of discount of $13 million and $15 million as of March 31, 2016, and December 31, 2015, respectively.
(c)  Net of discount of $20 million and $21 million as of March 31, 2016, and December 31, 2015, respectively.
(d)  Applicable rate is determined by the Borrower Leverage Ratio, as defined in the credit agreement.

17

                                            

The financing arrangements listed above contain certain covenants, including financial covenants that the Company is required to be in compliance with during the term of the respective arrangement. As of March 31, 2016, the Company was in compliance with all of the required covenants.
The discussion below describes material changes to or additions of long-term debt for the three months ended March 31, 2016, as well as any other material financing transactions that took place subsequent to March 31, 2016.
CVSR Holdco Financing Arrangement
On July 15, 2016, CVSR Holdco, the indirect owner of the CVSR project, issued $200 million of senior secured notes that bear interest at 4.68% and mature on March 31, 2037.  Net proceeds were distributed to the Company and NRG based on the ownership as of July 15, 2016, and accordingly, the Company received net proceeds of  $97.5 million .
NRG Yield Operating LLC 2026 Senior Notes
On August 18, 2016, NRG Yield Operating LLC issued $350 million of senior unsecured notes, or the 2026 Senior Notes. The Senior Notes bear interest of 5.00% and  mature on September 15, 2026. Interest on the notes is payable semi-annually on March 15 and September 15 of each year, and commence on March 15, 2017. The 2026 Senior Notes are senior unsecured obligations of NRG Yield Operating LLC and are guaranteed by NRG Yield LLC, and by certain of Yield Operating LLC’s wholly owned current and future subsidiaries. A portion of the proceeds from the 2026 Senior Notes were used to repay the revolving credit facility as described below.
NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility
The Company borrowed $60 million from the revolving credit facility and repaid $366 million during the eight months ended August 31, 2016. The repayments included the Company's pro rata proceeds of  $97.5 million  from the CVSR Holdco Financing Arrangement, as described above, along with  $28 million  of cash on hand. Additionally, in August 2016, the Company used a portion of its proceeds from the 2026 Senior Notes to pay the remaining revolver balance of $193 million in full as described above.

Note 9 — Earnings Per Share
Basic and diluted earnings (loss) per common share are computed by dividing net income (loss) by the weighted average number of common shares outstanding. Shares issued during the year are weighted for the portion of the year that they were outstanding. The number of shares and per share amounts for the prior periods presented below have been retrospectively restated to reflect the Recapitalization .
The reconciliation of the Company's basic and diluted earnings (loss) per share is shown in the following tables:

 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Three months ended March 31,	
 	2016	 	2015	
(In millions, except per share data) (a)	Common Class A	 	Common Class C	 	Common Class A	 	Common Class C	
Basic and diluted earnings (loss) per share attributable to NRG Yield, Inc. common stockholders	 	 	 	 	 	 	 	
Net income (loss) attributable to NRG Yield, Inc.	$	2	
 	 	$	3	
 	 	$	(3	)	 	$	(3	)	
Weighted average number of common shares outstanding	35	
 	 	63	
 	 	35	
 	 	35	
 	
Earnings (loss) per weighted average common share — basic and diluted	$	0.05	
 	 	$	0.05	
 	 	$	(0.07	)	 	$	(0.07	)	

 	
 	
(a) Net income (loss) attributable to NRG Yield, Inc. and basic and diluted earnings (loss) per share might not recalculate due to presenting values in millions rather than whole dollars.
With respect to the Class A common stock, there were a total of 15 million anti-dilutive outstanding equity instruments for the three months ended March 31, 2016, and 2015, related to the 2019 Convertible Notes. With respect to the Class C common stock, there were a total of 10 million anti-dilutive outstanding equity instruments for the three months ended March 31, 2016, related to the 2020 Convertible Notes.

18

                                            

Note 10 — Segment Reporting
The Company’s segment structure reflects how management currently operates and allocates resources. The Company's businesses are primarily segregated based on conventional power generation, renewable businesses which consist of solar and wind, and the thermal and chilled water business. The Corporate segment reflects the Company's corporate costs. The Company's chief operating decision maker, its Chief Executive Officer, evaluates the performance of its segments based on operational measures including adjusted earnings before interest, taxes, depreciation and amortization, or Adjusted EBITDA, and CAFD, as well as economic gross margin and net income (loss).

 	

 	

 	

 	Three months ended March 31, 2016 (a)	
(In millions)	Conventional Generation	
 	Renewables	
 	Thermal	
 	Corporate	
 	Total	
Operating revenues	$	79	
 	 	$	111	
 	 	$	44	
 	 	$	—	
 	
 	$	234	
 	
Cost of operations	23	
 	 	33	
 	 	29	
 	 	—	
 	
 	85	
 	
Depreciation and amortization	20	
 	 	49	
 	 	5	
 	 	—	
 	
 	74	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	3	
 	
 	3	
 	
Operating income (loss)	36	
 	 	29	
 	 	10	
 	 	(3	)	 	72	
 	
Equity in earnings (losses) of unconsolidated affiliates	3	
 	 	—	
 	 	—	
 	 	—	
 	
 	3	
 	
Interest expense	(11	)	 	(42	)	 	(2	)	 	(19	)	
 	(74	)	
Income (loss) before income taxes	28	
 	 	(13	)	 	8	
 	 	(22	)	
 	1	
 	
Net Income (Loss)	$	28	
 	 	$	(13	)	 	$	8	
 	 	$	(22	)	
 	$	1	
 	
Total Assets	$	2,017	
 	 	$	5,908	
 	 	$	430	
 	 	$	194	
 	
 	$	8,549	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Three months ended March 31, 2015 (a)	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	76	
 	 	$	91	
 	 	$	47	
 	 	$	—	
 	 	$	214	
 	
Cost of operations	21	
 	 	31	
 	 	34	
 	 	—	
 	 	86	
 	
Depreciation and amortization	21	
 	 	49	
 	 	5	
 	 	—	
 	 	75	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	3	
 	 	3	
 	
Operating income (loss)	34	
 	 	11	
 	 	8	
 	 	(3	)	 	50	
 	
Equity in earnings (losses) of unconsolidated affiliates	3	
 	 	—	
 	 	—	
 	 	—	
 	 	3	
 	
Other income, net	1	
 	 	—	
 	 	—	
 	 	—	
 	 	1	
 	
Interest expense	(12	)	 	(52	)	 	(2	)	 	(13	)	 	(79	)	
Income (loss) before income taxes	26	
 	 	(41	)	 	6	
 	 	(16	)	 	(25	)	
Income tax benefit	—	
 	 	—	
 	 	—	
 	 	(4	)	 	(4	)	
Net Income (Loss)	$	26	
 	 	$	(41	)	 	$	6	
 	 	$	(12	)	 	$	(21	)	

 	
 	
(a)  Retrospectively adjusted as discussed in Note 1, Nature of Business.
Note 11 — Income Taxes
Effective Tax Rate
The income tax provision consisted of the following:

 	Three months ended March 31,	
 	2016	 	2015	
 	(In millions, except percentages)	
Income (Loss) before income taxes	$	1	
 	 	$	(25	)	
Income tax benefit	—	
 	 	(4	)	
Effective income tax rate	—	%	 	16.0	%	
For the three months ended March 31, 2016, and 2015, the overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and production tax credits generated from certain wind assets.

19

                                            

For tax purposes, NRG Yield LLC is treated as a partnership; therefore, the Company and NRG each record their respective share of taxable income or loss.

Note 12 — Related Party Transactions
In addition to the transactions and relationships described elsewhere in these notes to the consolidated financial statements, NRG and certain subsidiaries of NRG provide services to the Company's project entities. Amounts due to NRG subsidiaries are recorded as accounts payable - affiliate and amounts due to the Company from NRG or its subsidiaries are recorded as accounts receivable - affiliate in the Company's balance sheet.
Power Hedge Contracts by and between Renewable Entities and NRG Texas Power LLC
Certain NRG Wind TE Holdco entities, which are subsidiaries in the Renewables segment, entered into power hedge contracts with NRG Texas Power LLC and generated $7 million during the three months ended March 31, 2015. Effective October 2015, Elbow Creek, one of the NRG Wind TE Holdco entities, entered into a PPA with NRG Power Marketing LLC, as further described below, and the hedge agreement between Elbow Creek and NRG Texas Power LLC was terminated.
Additionally, Alta X and Alta XI entered into a hedge agreement with NRG Texas Power LLC, as further described in Note 7,  Accounting for Derivative Instruments and Hedging Activities , to hedge the forecasted sale of power until the start of the PPAs on January 1, 2016.
Power Purchase Agreement by and between Elbow Creek and NRG Power Marketing LLC
In October 2015, Elbow Creek, the Company's subsidiary from the Renewable segment, entered into a PPA with NRG Power Marketing LLC for the sale of energy and environmental attributes with the effective date of January 1, 2016. Elbow Creek generated $3 million during the three months ended March 31, 2016.
Operation and Maintenance (O&M) Services Agreements by and between Thermal Entities and NRG
On October 1, 2014, NRG entered into Plant O&M Services Agreements with certain wholly-owned subsidiaries of the Company. NRG provides necessary and appropriate services to operate and maintain the subsidiaries' plant operations, businesses and thermal facilities. NRG is to be reimbursed for the provided services, as well as for all reasonable and related expenses and expenditures, and payments to third parties for services and materials rendered to or on behalf of the parties to the agreements. NRG is not entitled to any management fee or mark-up under the agreements. Prior to October 1, 2014, NRG provided the same services to the Thermal Business on an informal basis. Total fees incurred under the agreements were $7 million for the three months ended March 31, 2016, and 2015. There was a balance of $28 million due to NRG in accounts payable — affiliate as of March 31, 2016, and December 31, 2015. As of March 31, 2016, $8 million of it was recorded in the current liabilities of the consolidated balance sheet and $20 million was recorded in long term liabilities of the consolidated balance sheet. Subsequent to March 31, 2016, $3 million of the outstanding balance has been paid.
Power Sales and Services Agreement by and between NRG Energy Center Dover LLC and NRG
NRG Energy Center Dover LLC, or NRG Dover, a subsidiary of the Company, is party to a Power Sales and Services Agreement with NRG Power Marketing LLC, or NRG Power Marketing, a wholly-owned subsidiary of NRG. The agreement is automatically renewed on a month-to-month basis unless terminated by either party upon at least 30 days written notice. Under the agreement, NRG Power Marketing has the exclusive right to (i) manage, market and sell power, (ii) procure fuel and fuel transportation for operation of the Dover generating facility, to include for purposes other than generating power, (iii) procure transmission services required for the sale of power, and (iv) procure and market emissions credits for operation of the Dover generating facility.
In addition, NRG Power Marketing has the exclusive right and obligation to direct the output from the generating facility, in accordance with and to meet the terms of any power sales contracts executed against the power generation of the Dover facility. Under the agreement, NRG Power Marketing pays NRG Dover gross receipts generated through sales, less costs incurred by NRG Power Marketing related to providing such services as transmission and delivery costs, as well as fuel costs. In July 2013, the coal-fueled plant was converted to a natural gas facility. For the three months ended March 31, 2016, and 2015, NRG Dover purchased $1 million and $2 million, respectively, of natural gas from NRG Power Marketing.

20

                                            

Energy Marketing Services Agreement by and between NRG Energy Center Minneapolis LLC and NRG
NRG Energy Center Minneapolis LLC, or NRG Minneapolis, a subsidiary of the Company is party to an Energy Marketing Services Agreement with NRG Power Marketing, a wholly-owned subsidiary of NRG. The agreement commenced in August 2014 and is automatically renewed annually unless terminated by either party upon at least 90 day written notice prior to the end of any term. Under the agreement, NRG Power Marketing will procure fuel and fuel transportation for the operation of the Minneapolis generating facility. For the three months ended March 31, 2016, and 2015, NRG Minneapolis purchased $3 million and $4 million, respectively, of natural gas from NRG Power Marketing.
O&MServices Agreements by and between GenConn and NRG
GenConn incurs fees under two O&M services agreements with wholly-owned subsidiaries of NRG. The fees incurred under the agreements were $1 million and $2 million for the three months ended March 31, 2016, and 2015, respectively.
O&MServices Agreement by and between El Segundo and NRG El Segundo Operations
El Segundo incurs fees under an O&M services agreement with NRG El Segundo Operations, Inc., a wholly-owned subsidiary of NRG. Under the O&M services agreement, NRG El Segundo Operations, Inc. manages, operates and maintains the El Segundo facility for an initial term of ten years following the commercial operations date. For the three months ended March 31, 2016, and 2015, the costs incurred under the agreement were $1 million. There was a balance of $2 million and $1 million due to NRG El Segundo in accounts payable — affiliate as of March 31, 2016, and December 31, 2015, respectively.
Administrative Services Agreement by and between Marsh Landing and GenOn Energy Services, LLC
Marsh Landing is a party to an administrative services agreement with GenOn Energy Services, LLC, a wholly-owned subsidiary of NRG, which provides invoice processing and payment on behalf of Marsh Landing. Marsh Landing reimburses GenOn Energy Services, LLC for the amounts paid by it. The Company reimbursed costs under this agreement of $2 million for the three months ended March 31, 2016, and 2015. There was a balance of $6 million due to GenOn Energy Services, LLC in accounts payable — affiliate as of March 31, 2016, and December 31, 2015.
Administrative Services Agreement by and between CVSR and NRG
CVSR is a party to an administrative services agreement with NRG Energy Services LLC, a wholly-owned subsidiary of NRG, which provides O&M services on behalf of CVSR. CVSR reimburses NRG Energy Services LLC for the amounts paid by it. CVSR reimbursed costs under this agreement of $1 million for the three months ended March 31, 2016, and 2015.
Management Services Agreement by and between the Company and NRG
NRG provides the Company with various operation, management, and administrative services, which include human resources, accounting, tax, legal, information systems, treasury, and risk management, as set forth in the Management Services Agreement. As of March 31, 2016, the base management fee was approximately $7 million per year, subject to an inflation-based adjustment annually at an inflation factor based on the year-over-year U.S. consumer price index. The fee is also subject to adjustments following the consummation of future acquisitions and as a result of a change in the scope of services provided under the Management Services Agreement. During the year ended December 31, 2015, the fee was increased by $1 million per year primarily due to the acquisitions of the January 2015 Drop Down Assets and the November 2015 Drop Down Assets. Costs incurred under this agreement were $2 million for the three months ended March 31, 2016, and 2015, which included certain direct expenses incurred by NRG on behalf of the Company in addition to the base management fee. There was a balance of $3 million due to NRG in accounts payable — affiliate as of March 31, 2016.
Administrative Services Agreements by and between NRG Wind TE Holdco and NRG
Certain subsidiaries of NRG have entered into agreements with the Company's project entities to provide operation and maintenance services for the balance of the plants not covered by turbine supplier's maintenance and service agreements for the post-warranty period. The agreements have various terms with provisions for extension until terminated. For the three months ended March 31, 2016, and 2015, the costs incurred under the agreements were $1 million.
Certain subsidiaries of NRG provide support services to the NRG Wind TE Holdco project entities pursuant to various support services agreements. The agreements provide for administrative and support services and reimbursements of certain insurance, consultant, and credit costs. For the three months ended March 31, 2016, and 2015, the costs incurred under the agreements were $1 million.

21

                                            

Note 13— Contingencies
The Company's material legal proceeding is described below. The Company believes that it has a valid defense to this legal proceeding and intends to defend it vigorously. The Company records reserves for estimated losses from contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. In addition, legal costs are expensed as incurred. Management assesses such matters based on current information and makes a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought, and the probability of success. The Company is unable to predict the outcome of the legal proceeding below or reasonably estimate the scope or amount of any associated costs and potential liabilities. As additional information becomes available, management adjusts its assessment and estimates of such contingencies accordingly. Because litigation is subject to inherent uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of the Company's liabilities and contingencies could be at amounts that are different from its currently recorded reserves and that such difference could be material.
In addition to the legal proceeding noted below, the Company and its subsidiaries are party to other litigation or legal proceedings arising in the ordinary course of business. In management's opinion, the disposition of these ordinary course matters will not materially adversely affect the Company's consolidated financial position, results of operations, or cash flows.
Braun v. NRG Yield, Inc. — On April 19, 2016, plaintiffs filed a purported class action lawsuit against NRG Yield, Inc. and against each current and former member of its board of directors individually in California Superior Court in Kern County, CA. Plaintiffs allege various violations of the Securities Act due to the defendants’ alleged failure to disclose material facts related to low wind production prior to the Company's June 22, 2015 Class C common stock offering. Plaintiffs seek compensatory damages, rescission, attorney’s fees and costs.  On August 3, 2016, the court approved a stipulation entered into by the parties. The stipulation provided that the plaintiffs would file an amended complaint by August 19, 2016, which they did on August 18, 2016. The Defendants need to file a responsive pleading by October 18, 2016.

22

Exhibit 99.8
ITEM 2 — Management's Discussion and Analysis of Financial Condition and the Results of Operations

The following discussion analyzes the Company's historical financial condition and results of operations, which were recast to include the effect of the CVSR Drop Down Asset and the November 2015 Drop Down Assets, which were acquired from NRG on September 1, 2016 and November 3, 2015, respectively. As further discussed in Note 1,  Nature of Business , to the Consolidated Financial Statements, the purchase of these assets was accounted for in accordance with ASC 805-50 , Business Combinations - Related Issues , pursuant to which the assets and liabilities transferred to the Company relate to interests under common control by NRG and, accordingly, were recorded at historical cost. The difference between the cash proceeds and historical value of the net assets was recorded as a distribution from NRG with the offset to noncontrolling interest. The guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control.
As you read this discussion and analysis, you should refer to the Company's Consolidated Statements of Operations to this Form 8-K, which present the results of operations for the three months ended March 31, 2016, and 2015. You should also refer to the Company's 2015 Form 10-K, which includes detailed discussions of various items impacting the Company's business, results of operations and financial condition.
The discussion and analysis below has been organized as follows:
 	 	
•	Executive Summary, including a description of the business and significant events that are important to understanding the results of operations and financial condition;	
 	 	
•	Results of operations, including an explanation of significant differences between the periods in the specific line items of the consolidated statements of operations;	
 	 	
•	Financial condition addressing liquidity position, sources and uses of cash, capital resources and requirements, commitments, and off-balance sheet arrangements;	
 	 	
•	Known trends that may affect the Company’s results of operations and financial condition in the future; and	
 	 	
•	Critical accounting policies which are most important to both the portrayal of the Company's financial condition and results of operations, and which require management's most difficult, subjective or complex judgment.	

1

Executive Summary
Introduction and Overview
The Company is a dividend growth-oriented company formed to serve as the primary vehicle through which NRG owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. The Company believes it is well positioned to be a premier company for investors seeking stable and growing dividend income from a diversified portfolio of lower-risk high-quality assets.
The Company owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the U.S. The Company’s contracted generation portfolio collectively represents  4,563 net MW.  Each of these assets sells substantially all of its output pursuant to long-term offtake agreements with creditworthy counterparties. The average remaining contract duration of these offtake agreements was approximately  17 years as of March 31, 2016,  based on CAFD . The Company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,315 net MWt and electric generation capacity of 124 net MW. These thermal infrastructure assets provide steam, hot water and/or chilled water, and in some instances electricity, to commercial businesses, universities, hospitals and governmental units in multiple locations, principally through long-term contracts or pursuant to rates regulated by state utility commissions.
Regulatory Matters
The Company’s regulatory matters are described in the Company’s 2015 Form 10-K in Item 1, Business —  Regulatory Matters  and Item 1A,  Risk Factors.
As owners of power plants and participants in wholesale and thermal energy markets, certain of the Company's subsidiaries are subject to regulation by various federal and state government agencies. These include FERC and the PUCT, as well as other public utility commissions in certain states where the Company's assets are located. Each of the Company's U.S. generating facilities qualifies as a EWG or QF. In addition, the Company is subject to the market rules, procedures and protocols of the various ISO and RTO markets in which it participates. Likewise, the Company must also comply with the mandatory reliability requirements imposed by NERC and the regional reliability entities in the regions where the Company operates.
The Company's operations within the ERCOT footprint are not subject to rate regulation by FERC, as they are deemed to operate solely within the ERCOT market and not in interstate commerce. These operations are subject to regulation by the PUCT.
Environmental Matters
The Company’s environmental matters are described in the Company’s 2015 Form 10-K in Item 1, Business —  Environmental Matters  and Item 1A,  Risk Factors.
The Company is subject to a wide range of environmental laws in the development, construction, ownership and operation of projects. These laws generally require that governmental permits and approvals be obtained before construction and during operation of facilities. The Company is also subject to laws and regulations surrounding the protection of wildlife, including migratory birds, eagles and threatened and endangered species. Environmental laws have become increasingly stringent and the Company expects this trend to continue.
Trends Affecting Results of Operations and Future Business Performance
Wind and Solar Resource Availability

The availability of the wind and solar resources affects the financial performance of the wind and solar facilities, which may impact the Company’s overall financial performance.  Due to the variable nature of the wind and solar resource, the Company cannot predict the availability of the wind and solar resources and the potential variances from expected performance levels from quarter to quarter.  To the extent the wind and solar resources are not available at expected levels, it could have a negative impact on the Company’s financial performance for such periods. For the first quarter of 2016, the wind performance was above prior year as well as the Company's expectations; however, the wind resources for the month of April were below expectations. If the April wind performance continues for a prolonged period of time, without a return to a performance level that meets or exceeds Company expectations, it may have a negative impact on the Company's financial performance.

2

CapitalMarket Conditions
The Company and its peer group have recently experienced difficult conditions in the capital markets. The Company’s growth strategy depends on its ability to identify and acquire additional conventional and renewable facilities from NRG and unaffiliated third parties.  A prolonged disruption in the equity capital market conditions could make it difficult for the Company to successfully acquire attractive projects from NRG or third parties and may also limit the Company’s ability to obtain debt or equity financing to complete such acquisitions.  If the Company is unable to raise adequate proceeds when needed to fund such acquisitions, the ability to grow its project portfolio may be limited, which could have a material adverse effect on the Company’s ability to implement its growth strategy. A full description of the risks applicable to the Company's business is presented in the Company’s 2015 Form 10-K in Item 1A,  Risk Factors .

Consolidated Results of Operations
The following table provides selected financial information:

 	Three months ended March 31,	
(In millions, except otherwise noted)	2016	 	2015	 	Change %	
Operating Revenues	 	 	 	 	 	
Energy and capacity revenues	$	251	
 	 	$	218	
 	 	15	
 	
Contract amortization	(17	)	 	(11	)	 	55	
 	
Mark-to-market economic hedging activities	—	
 	 	7	
 	 	(100	)	
Total operating revenues	234	
 	 	214	
 	 	9	
 	
Operating Costs and Expenses	 	 	 	 	 	
Cost of fuels	16	
 	 	22	
 	 	(27	)	
Emissions credit amortization	6	
 	 	—	
 	 	100	
 	
Operations and maintenance	44	
 	 	47	
 	 	(6	)	
Other costs of operations	19	
 	 	17	
 	 	12	
 	
Depreciation and amortization	74	
 	 	75	
 	 	(1	)	
General and administrative	3	
 	 	3	
 	 	—	
 	
Total operating costs and expenses	162	
 	 	164	
 	 	(1	)	
Operating Income	72	
 	 	50	
 	 	44	
 	
Other Income (Expense)	 	 	 	 	
 	
Equity in earnings of unconsolidated affiliates	3	
 	 	3	
 	 	—	
 	
Other income, net	—	
 	 	1	
 	 	(100	)	
Interest expense	(74	)	 	(79	)	 	(6	)	
Total other expense, net	(71	)	 	(75	)	 	(5	)	
Income (Loss) Before Income Taxes	1	
 	 	(25	)	 	104	
 	
Income tax benefit	—	
 	 	(4	)	 	(100	)	
Net Income (Loss)	1	
 	 	(21	)	 	105	
 	
Less: Pre-acquisition net loss of Drop Down Assets	(1	)	 	(5	)	 	(80	)	
Net Income (Loss) Excluding Pre-acquisition Net Loss of Drop Down Assets	2	
 	 	(16	)	 	113	
 	
Less: Net loss attributable to noncontrolling interests	(3	)	 	(11	)	 	73	
 	
Net Income (Loss) Attributable to NRG Yield, Inc.	$	5	
 	 	$	(5	)	 	200	

 	
 	 	 	 	 	 	
 	Three months ended March 31,	
Business metrics:	2016	 	2015	
Renewable MWh sold (in thousands) (a)	1,778	
 	 	1,306	
 	
Thermal MWt sold (in thousands)	553	
 	 	617	
 	
Thermal MWh sold (in thousands)	40	
 	 	44	

 	

(a)  Volumes sold do not include the MWh generated by the Company's equity method investments.

3

Management’s Discussion of the Results of Operations for the Three Months ended March 31, 2016, and 2015 
Gross Margin and Economic Gross Margin
In addition to gross margin, the Company evaluates its operating performance using the measure of economic gross margin, which is not a GAAP measure and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.  Economic gross margin should be viewed as a supplement to and not a substitute for the Company' presentation of gross margin, which is the most directly comparable GAAP measure.  Economic gross margin is not intended to represent gross margin. The Company believes that economic gross margin is useful to investors as it is a key operational measure reviewed by the Company's chief operating decision maker. Economic gross margin is defined as energy and capacity revenue less cost of fuels. Economic gross margin excludes the following components from GAAP gross margin: contract amortization, mark-to-market results, emissions credit amortization and (losses) gains on economic hedging activities. Mark-to-market results consist of unrealized gains and losses on contracts that are not yet settled.
The below tables present the composition of gross margin, as well as the reconciliation to economic gross margin, for the three months ended March 31, 2016, and 2015:

 	Conventional Generation	 	Renewables	 	Thermal	 	Total	
(In millions)	 	 	 	 	 	 	 	
Three months ended March 31, 2016	 	 	 	 	 	 	 	
Energy and capacity revenues	$	80	
 	 	$	126	
 	 	$	45	
 	 	$	251	
 	
Cost of fuels	—	
 	 	—	
 	 	(16	)	 	(16	)	
Contract Amortization	(1	)	 	(15	)	 	(1	)	 	(17	)	
Emissions credit amortization	(6	)	 	—	
 	 	—	
 	 	(6	)	
Gross Margin	73	
 	 	111	
 	 	28	
 	 	212	
 	
Contract Amortization	1	
 	 	15	
 	 	1	
 	 	17	
 	
Emissions credit amortization	6	
 	 	$	—	
 	 	$	—	
 	 	$	6	
 	
Economic gross margin	$	80	
 	 	$	126	
 	
 	$	29	
 	
 	$	235	

Three months ended March 31, 2015	 	 	 	 	 	 	 	
Energy and capacity revenues	$	77	
 	 	$	93	
 	 	$	48	
 	 	$	218	
 	
Cost of fuels	(1	)	 	—	
 	 	(21	)	 	(22	)	
Contract Amortization	(1	)	 	(9	)	 	(1	)	 	(11	)	
Mark-to-market for economic hedging activities	—	
 	 	7	
 	 	—	
 	 	7	
 	
Gross Margin	75	
 	 	91	
 	 	26	
 	 	192	
 	
Contract Amortization	1	
 	 	9	
 	 	1	
 	 	11	
 	
Mark-to-market for economic hedging activities	—	
 	 	(7	)	 	—	
 	 	(7	)	
Economic gross margin	$	76	
 	 	$	93	
 	 	$	27	
 	 	$	196	

4

Gross Margin increased by $20 million and economic gross margin increased by $39 million during the three months ended March 31, 2016, compared to the same period in 2015 due to:

(In millions)	 	
Increase in Renewables economic gross margin due to higher wind generation at Alta, Tapestry, NRG Wind TE Holdco, and South Trent, as well as the acquisition of Spring Canyon	$	23	
 	
Increase in Renewables economic gross margin due to higher pricing for Alta X and XI PPAs, which began in January 2016, compared with merchant prices in 2015	10	
 	
Increase in Conventional Generation economic gross margin primarily due to higher revenues at El Segundo in 2016 as a result of a return to service after an extended forced outage in 2015	4	
 	
Increase in Thermal economic gross margin primarily due to lower gas prices, partially offset by a decrease in generation due to milder weather conditions	2	
 	
Increase in economic gross margin	$	39	
 	
Higher contract amortization for the Alta X and XI PPAs, which began in January 2016, and the impact of final measurement period adjustments recorded in 2015	(6	)	
Emissions credit amortization of NOx allowances at Walnut Creek and El Segundo in compliance with amendments to the Regional Clean Air Incentives Market program	(6	)	
Decrease due to unrealized gains on forward contracts with an NRG subsidiary hedging the forecasted sale of power from Elbow Creek, Alta X and Alta XI in 2015, prior to the start of the PPAs	(7	)	
Increase in gross margin	$	20	
 	
Operations and Maintenance Expense
Operations and maintenance expense decreased by $3 million during the three months ended March 31, 2016, compared to the same period in 2015, due to a decrease related to the prior year forced outage at El Segundo, partially offset by an increase from higher wind generation in the current year.    

 	

 	
 	
Interest Expense     
Interest expense decreased by $5 million during the three months ended March 31, 2016, compared to the same period in 2015, due to:

(In millions)	 	
Increase due to issuance of the 2020 Convertible Notes in the second quarter of 2015	$	4	
 	
Increase due to higher Corporate revolver net borrowings in the first quarter of 2016	2	
 	
Increase from changes in the fair value of Alpine interest rate swaps	2	
 	
Decrease from repricing of project-level financing arrangements and principal repayments in the Conventional segment	(1	)	
Decrease for redemption of Alta X and XI project-level debt	(12	)	
 	$	(5	)	
Income Tax Expense
For the three months ended March 31, 2016, the Company did not record any income tax expense on the pretax income of $1 million. For the same period in 2015, the Company recorded an income tax benefit of $4 million on a pretax loss of $25 million. For the three months ended March 31, 2016 and 2015, the overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and production tax credits generated from certain wind assets.
Income Attributable to Noncontrolling Interests
For the three months ended March 31, 2016, the Company had income of $10 million attributable to NRG related to its 46.7% economic interest in NRG Yield LLC and its 25% interest in NRG Wind TE Holdco. Additionally, for the three months ended March 31, 2016, the Company had a loss of $13 million attributable to non-controlling interests with respect to its tax equity financing arrangements and the application of the HLBV method. For the three months ended March 31, 2015, the Company had a loss of $11 million attributable to NRG's 55.3% economic interest in the Company.

5

Liquidity and Capital Resources
The Company's principal liquidity requirements are to meet its financial commitments, finance current operations, fund capital expenditures, including acquisitions from time to time, to service debt and to pay dividends. Historically, the Company's predecessor operations were financed as part of NRG's integrated operations and largely relied on internally generated cash flows as well as corporate and/or project-level borrowings to satisfy its capital expenditure requirements.  As a normal part of the Company's business, depending on market conditions, the Company will from time to time consider opportunities to repay, redeem, repurchase or refinance its indebtedness. Changes in the Company's operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause the Company to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions.
Liquidity Position
As of March 31, 2016, and December 31, 2015, the Company's liquidity was approximately $303 million and $375 million, respectively, comprised of cash, restricted cash, and availability under the Company's revolving credit facility. Included in those numbers are $108 million and $131 million of restricted cash balances as of  March 31, 2016 , and  December 31, 2015 , respectively. Restricted cash consists primarily of funds to satisfy the requirements of certain debt agreements and funds held within the Company's projects that are restricted in their use. The Company's various financing arrangements are described in Note 8 ,  Long-term Debt.   As of  March 31, 2016 , the Company had $119 million of available borrowings under its revolving credit facility.
Management believes that the Company's liquidity position, cash flows from operations and availability under its revolving credit facility will be adequate to meet the Company's financial commitments; debt service obligations; growth, operating and maintenance capital expenditures; and to fund dividends to holders of the Company's Class A common stock and Class C common stock. Management continues to regularly monitor the Company's ability to finance the needs of its operating, financing and investing activity within the dictates of prudent balance sheet management.
Credit Ratings
Credit rating agencies rate a firm's public debt securities. These ratings are utilized by the debt markets in evaluating a firm's credit risk. Ratings influence the price paid to issue new debt securities by indicating to the market the Company's ability to pay principal, interest and preferred dividends. Rating agencies evaluate a firm's industry, cash flow, leverage, liquidity, and hedge profile, among other factors, in their credit analysis of a firm's credit risk.
The following table summarizes the credit ratings for the Company and its Senior Notes as of March 31, 2016:

 	S&P	 	Moody's	
NRG Yield, Inc. 	BB+	 	Ba2	
5.375% Senior Notes, due 2024	BB+	 	Ba2	
On August 15, 2016, S&P lowered its corporate credit ratings on NRG Yield, Inc. and the Senior Notes due 2024 to BB from BB+. The rating outlook is stable.

Sources of Liquidity
The Company's principal sources of liquidity include cash on hand, cash generated from operations, borrowings under new and existing financing arrangements and the issuance of additional equity and debt securities as appropriate given market conditions. As described in  Note 8 ,  Long-term Debt , to this Form 10-Q and Note 9,  Long-term Debt , to the audited consolidated financial statements included in the Company's 2015 Form 10-K, the Company's financing arrangements consist of the revolving credit facility, the 2019 Convertible Notes, the 2020 Convertible Notes, the Senior Notes and project-level financings for its various assets.

6

Uses of Liquidity
The Company's requirements for liquidity and capital resources, other than for operating its facilities, are categorized as: (i) debt service obligations, as described more fully in  Note 8 ,  Long-term Debt ; (ii) capital expenditures; (iii) acquisitions and investments; and (iv) cash dividends to investors.

Capital Expenditures
The Company's capital spending program is mainly focused on maintenance capital expenditures, or costs to maintain the assets currently operating, such as costs to replace or refurbish assets during routine maintenance, and growth capital expenditures or construction of new assets and completing the construction of assets where construction is in process. The Company develops annual capital spending plans based on projected requirements for maintenance and growth capital. For the three months ended March 31, 2016 , and 2015, the Company used approximately $7 million and $3 million, respectively, to fund capital expenditures. The capital expenditures in the first  three months  of 2016 relate primarily to maintenance expenses.
Acquisitions and Investments
The Company intends to acquire generation assets developed and constructed by NRG in the future, as well as generation and thermal infrastructure assets from third parties where the Company believes its knowledge of the market and operating expertise provides a competitive advantage, and to utilize such acquisitions as a means to grow its CAFD. 
CVSR— On September 1, 2016, the Company acquired the remaining 51.05% interest of CVSR Holdco LLC, which indirectly owns the CVSR solar facility, CVSR Holdco LLC, which indirectly owns the CVSR solar facility, for total cash consideration of $78.5 million, subject to working capital adjustments. The acquisition was funded with cash on hand.

Cash Dividends to Investors
The Company intends to use the amount of cash that it receives from its distributions from NRG Yield LLC to pay quarterly dividends to the holders of its Class A common stock and Class C common stock. NRG Yield LLC intends to distribute to its unit holders in the form of a quarterly distribution all of the CAFD it generates each quarter, less reserves for the prudent conduct of the business, including among others, maintenance capital expenditures to maintain the operating capacity of the assets. CAFD is defined as net income before interest expense, income taxes, depreciation and amortization; plus cash distributions from unconsolidated affiliates; less cash distributions to noncontrolling interests, maintenance capital expenditures, pro-rata EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness and changes in other assets. Dividends on t he Class A common stock and Class C common stock are subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations. The Company expects that, based on current circumstances, comparable cash dividends will continue to be paid in the foreseeable future.
The following table lists the dividends paid on the Company's Class A common stock and Class C common stock during the three months ended March 31, 2016:

 	First Quarter 2016	
Dividends per Class A share	$	0.225	
 	
Dividends per Class C share	$	0.225	
 	
On April 26, 2016, the Company declared quarterly dividends on its Class A common stock and Class C common stock of $0.23 per share payable on June 15, 2016, to stockholders of record as of June 1, 2016.

7

Cash Flow Discussion
The following table reflects the changes in cash flows for the three months ended March 31, 2016, compared to 2015:

 	Three months ended March 31,	 	 	
 	2016	 	2015	 	Change	

 	(In millions)	
Net cash provided by operating activities	$	89	
 	 	$	62	
 	 	$	27	
 	
Net cash used in investing activities	(21	)	 	(452	)	 	431	
 	
Net cash (used in) provided by financing activities	(103	)	 	95	
 	 	(198	)	
Net Cash Provided By Operating Activities

Changes to net cash provided by operating activities were driven by:	(In millions)	
Increase in operating income adjusted for non-cash items	$	43	
 	
Lower net distributions from unconsolidated affiliates	(19	)	
Changes in working capital driven primarily by the timing of wind generation in 2015 compared to 2016	3	
 	
 	$	27	
 	
Net Cash Used In Investing Activities

Changes to net cash used in investing activities were driven by:	(In millions)	
Payments made to acquire the January 2015 Drop Down Assets	$	490	
 	
Increase in capital expenditures due to higher maintenance expenses in 2016	(4	)	
Changes in restricted cash due to higher funding for certain projects' debt reserves partially offset by higher project distributions in 2016 compared to 2015	(11	)	
Increase in investments in unconsolidated affiliates due primarily to cash payments related to DGPV Holdco 1 and RPV Holdco	(46	)	
Working capital payment received in 2016 relating to the November 2015 Drop Down Assets	2	
 	
 	$	431	
 	
Net Cash (Used in) Provided By Financing Activities

Changes in net cash (used in) provided by financing activities were driven by:	(In millions)	
Net contributions from noncontrolling interests	$	10	
 	
Payment of distributions to NRG due to NRG's 25% ownership of NRG Wind TE Holdco	(3	)	
Increase in dividends and distributions paid to common stockholders	(11	)	
Lower net borrowings from the revolving credit facility partially offset by a decrease in payments for debt in 2016 compared to 2015	(194	)	
 	$	(198	)	

NOLs, Deferred Tax Assets and Uncertain Tax Position Implications, under ASC 740
As of March 31, 2016, the Company has a cumulative federal NOL carry forward balance of $519 million for financial statement purposes, which will begin expiring in 2033. As a result of the Company's tax position, and based on current forecasts, the Company does not anticipate significant income tax payments for federal, state and local jurisdictions in 2016. Based on the Company's current and expected NOL balances generated primarily by accelerated tax depreciation of its property, plant and equipment, the Company does not expect to pay significant federal income tax for a period of approximately nine years.
The Company is subject to examination by taxing authorities for income tax returns filed in the U.S. federal jurisdiction and various state jurisdictions. The Company is not subject to U.S. federal or state income tax examinations for years prior to 2013. 

8

The Company has no uncertain tax benefits.

Off-Balance Sheet Arrangements
Obligations under Certain Guarantee Contracts
The Company may enter into guarantee arrangements in the normal course of business to facilitate commercial transactions with third parties.
Retained or Contingent Interests
The Company does not have any material retained or contingent interests in assets transferred to an unconsolidated entity.
Obligations Arising Out of a Variable Interest in an Unconsolidated Entity
Variable interest in equity investments — As of March 31, 2016, the Company has several investments with an ownership interest percentage of 50% or less in energy and energy-related entities that are accounted for under the equity method. DGPV Holdco 1, DGPV Holdco 2, RPV Holdco and GenConn are variable interest entities for which the Company is not the primary beneficiary.
The Company's pro-rata share of non-recourse debt held by unconsolidated affiliates was approximately $450 million as of March 31, 2016. This indebtedness may restrict the ability of these subsidiaries to issue dividends or distributions to the Company. See also Note 5,  Variable Interest Entities, or VIEs .
Contractual Obligations and Commercial Commitments
The Company has a variety of contractual obligations and other commercial commitments that represent prospective cash requirements in addition to our capital expenditure programs, as disclosed in the Company's 2015 Form 10-K.

Fair Value of Derivative Instruments
The Company may enter into fuel purchase contracts and other energy-related financial instruments to mitigate variability in earnings due to fluctuations in spot market prices and to hedge fuel requirements at certain generation facilities. In addition, in order to mitigate interest rate risk associated with the issuance of variable rate debt, the Company enters into interest rate swap agreements.
The tables below disclose the activities of non-exchange traded contracts accounted for at fair value in accordance with ASC 820. Specifically, these tables disaggregate realized and unrealized changes in fair value; disaggregate estimated fair values at  March 31, 2016 , based on their level within the fair value hierarchy defined in ASC 820; and indicate the maturities of contracts at  March 31, 2016 . For a full discussion of the Company's valuation methodology of its contracts, see  Derivative Fair Value Measurements  in  Note 6 ,  Fair Value of Financial Instruments .

Derivative Activity Gains/(Losses)	(In millions)	
Fair value of contracts as of December 31, 2015	$	(100	)	
Contracts realized or otherwise settled during the period	9	
 	
Changes in fair value	(57	)	
Fair Value of contracts as of March 31, 2016	$	(148	)	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Fair Value of contracts as of March 31, 2016	
 	Maturity	 	 	
Fair Value Hierarchy Losses	1 Year or Less	 	Greater Than 1 Year to 3 Years	 	Greater Than 3 Years to 5 Years	 	Greater Than 5 Years	 	Total Fair
Value	
 	(In millions)	
Level 2	$	38	
 	 	$	56	
 	 	$	31	
 	 	$	23	
 	 	$	148	

9

The Company has elected to disclose derivative assets and liabilities on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. As discussed below in  Quantitative and Qualitative Disclosures about Market Risk -Commodity Price Risk,  NRG, on behalf of the  Company, measures the sensitivity of the portfolio to potential changes in market prices using VaR, a statistical model which attempts to predict risk of loss based on market price and volatility. NRG's risk management policy places a limit on one-day holding period VaR, which limits the net open position.

Critical Accounting Policies and Estimates
The Company's discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and related disclosures in compliance with U.S. GAAP requires the application of appropriate technical accounting rules and guidance as well as the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. The application of these policies necessarily involves judgments regarding future events, including the likelihood of success of particular projects, legal and regulatory challenges, and the fair value of certain assets and liabilities. These judgments, in and of themselves, could materially affect the financial statements and disclosures based on varying assumptions, which may be appropriate to use. In addition, the financial and operating environment may also have a significant effect, not only on the operation of the business, but on the results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even if the nature of the accounting policies has not changed.
On an ongoing basis, the Company evaluates these estimates, utilizing historic experience, consultation with experts and other methods the Company considers reasonable. In any event, actual results may differ substantially from the Company's estimates. Any effects on the Company's business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the information that gives rise to the revision becomes known.
The Company's significant accounting policies are summarized in Note 2, Summary of Significant Accounting Policies, to the Company's 2015 Form 10-K. The Company identifies its most critical accounting policies as those that are the most pervasive and important to the portrayal of the Company's financial position and results of operations, and that require the most difficult, subjective and/or complex judgments by management regarding estimates about matters that are inherently uncertain. The Company's critical accounting policies include income taxes and valuation allowance for deferred tax assets, impairment of long lived assets and other intangible assets and acquisition accounting.
Recent Accounting Developments
See Note 2, Summary of Significant Accounting Policies, for a discussion of recent accounting developments.

10

Exhibit 99.9
ITEM 1 — FINANCIAL STATEMENTS
NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 	Three months ended June 30,	 	Six months ended June 30,	
(In millions, except per share amounts)	2016 (a)	 	2015 (a)	 	2016 (a)	 	2015 (a)	
Operating Revenues	 	 	 	 	 	 	 	
Total operating revenues	$	283	
 	 	$	259	
 	 	$	517	
 	 	$	473	
 	
Operating Costs and Expenses	 	 	 	 	 	 	 	
Cost of operations	77	
 	 	78	
 	 	162	
 	 	164	
 	
Depreciation and amortization	75	
 	 	78	
 	 	149	
 	 	153	
 	
General and administrative	3	
 	 	3	
 	 	6	
 	 	6	
 	
Acquisition-related transaction and integration costs	—	
 	 	1	
 	 	—	
 	 	1	
 	
Total operating costs and expenses	155	
 	 	160	
 	 	317	
 	 	324	
 	
Operating Income	128	
 	 	99	
 	 	200	
 	 	149	
 	
Other Income (Expense)	 	 	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	13	
 	 	4	
 	 	16	
 	 	7	
 	
Other income, net	2	
 	 	1	
 	 	2	
 	 	2	
 	
Loss on debt extinguishment	—	
 	 	(7	)	 	—	
 	 	(7	)	
Interest expense	(68	)	 	(51	)	 	(142	)	 	(130	)	
Total other expense, net	(53	)	 	(53	)	 	(124	)	 	(128	)	
Income Before Income Taxes	75	
 	 	46	
 	 	76	
 	 	21	
 	
Income tax expense	12	
 	 	4	
 	 	12	
 	 	—	
 	
Net Income	63	
 	 	42	
 	 	64	
 	 	21	
 	
Less: Pre-acquisition net income (loss) of Drop Down Assets	5	
 	 	1	
 	 	4	
 	 	(4	)	
Net Income Excluding Pre-acquisition Net Income (Loss) of Drop Down Assets	58	
 	 	41	
 	 	60	
 	 	25	
 	
Less: Net income attributable to noncontrolling interests	26	
 	 	31	
 	 	23	
 	 	20	
 	
Net Income Attributable to NRG Yield, Inc.	$	32	
 	 	$	10	
 	 	$	37	
 	 	$	5	
 	
Earnings Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders	 	 	 	 	 	 	 	
Weighted average number of Class A common shares outstanding - basic	35	
 	 	35	
 	 	35	
 	 	35	
 	
Weighted average number of Class A common shares outstanding - diluted	49	
 	 	35	
 	 	35	
 	 	35	
 	
Weighted average number of Class C common shares outstanding - basic	63	
 	 	35	
 	 	63	
 	 	35	
 	
Weighted average number of Class C common shares outstanding - diluted	73	
 	 	35	
 	 	63	
 	 	35	
 	
Earnings per Weighted Average Class A and Class C Common Share - Basic	$	0.33	
 	 	$	0.15	
 	 	$	0.38	
 	 	$	0.07	
 	
Earnings per Weighted Average Class A Common Share - Diluted	0.29	
 	 	0.15	
 	 	0.38	
 	 	0.07	
 	
Earnings per Weighted Average Class C Common Share - Diluted	0.31	
 	 	0.15	
 	 	0.38	
 	 	0.07	
 	
Dividends Per Class A Common Share	0.23	
 	 	0.20	
 	 	0.455	
 	 	0.59	
 	
Dividends Per Class C Common Share	$	0.23	
 	 	$	0.20	
 	 	$	0.455	
 	 	$	0.20	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.
See accompanying notes to consolidated financial statements.

1

                                            

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

 	Three months ended June 30,	 	Six months ended June 30,	
(In millions)	2016 (a)	 	2015 (a)	 	2016 (a)	 	2015 (a)	
Net Income	$	63	
 	 	$	42	
 	 	$	64	
 	 	$	21	
 	
Other Comprehensive (Loss) Income, net of tax	 	 	 	 	 	 	 	
Unrealized (loss) gain on derivatives, net of income tax benefit (expense) of $3, ($4), $12 and $4	(16	)	 	23	
 	 	(57	)	 	3	
 	
Other comprehensive (loss) income	(16	)	 	23	
 	 	(57	)	 	3	
 	
Comprehensive Income	47	
 	 	65	
 	 	7	
 	 	24	
 	
Less: Pre-acquisition net loss of Drop Down Assets	5	
 	 	1	
 	 	4	
 	 	(4	)	
Less: Comprehensive income (loss) attributable to noncontrolling interests	13	
 	 	48	
 	 	(14	)	 	30	
 	
Comprehensive Income (Loss) Attributable to NRG Yield, Inc.	$	29	
 	 	$	16	
 	 	$	17	
 	 	$	(2	)	

 	
 	
(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

2

                                            

NRG YIELD, INC.
CONSOLIDATED BALANCE SHEETS

(In millions, except shares)	June 30, 2016 (a)	 	December 31, 2015 (a)	
ASSETS	(unaudited)	 	 	
Current Assets	 	 	 	
Cash and cash equivalents	$	89	
 	 	$	111	
 	
Restricted cash	123	
 	 	131	
 	
Accounts receivable — trade	121	
 	 	98	
 	
Accounts receivable — affiliate	1	
 	 	—	
 	
Inventory	36	
 	 	36	
 	
Derivative instruments	1	
 	 	—	
 	
Notes receivable	17	
 	 	17	
 	
Prepayments and other current assets	23	
 	 	23	
 	
Total current assets	411	
 	 	416	
 	
Property, plant and equipment, net of accumulated depreciation of $928 and $782	5,761	
 	 	5,878	
 	
Other Assets	 	 	 	
Equity investments in affiliates	683	
 	 	697	
 	
Notes receivable	21	
 	 	30	
 	
Intangible assets, net of accumulated amortization of $132 and $93	1,321	
 	 	1,362	
 	
Deferred income taxes	170	
 	 	170	
 	
Other non-current assets	141	
 	 	136	
 	
Total other assets	2,336	
 	 	2,395	
 	
Total Assets	$	8,508	
 	 	$	8,689	
 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	
Current Liabilities	 	

Current portion of long-term debt	$	274	
 	 	$	264	
 	
Accounts payable — trade	22	
 	 	23	
 	
Accounts payable — affiliate	33	
 	 	86	
 	
Derivative instruments	37	
 	 	39	
 	
Accrued expenses and other current liabilities	48	
 	 	77	
 	
Total current liabilities	414	
 	 	489	
 	
Other Liabilities	 	 	 	
Long-term debt	5,218	
 	 	5,329	
 	
Accounts payable — affiliate	20	
 	 	—	
 	
Derivative instruments	122	
 	 	61	
 	
Other non-current liabilities	79	
 	 	72	
 	
Total non-current liabilities	5,439	
 	 	5,462	
 	
Total Liabilities	5,853	
 	 	5,951	
 	
Commitments and Contingencies	 	 	 	
Stockholders' Equity	 	 	 	
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued	—	
 	 	—	
 	
Class A, Class B, Class C and Class D common stock, $0.01 par value; 3,000,000,000 shares authorized (Class A 500,000,000, Class B 500,000,000, Class C 1,000,000,000, Class D 1,000,000,000); 182,848,000 shares issued and outstanding (Class A 34,586,250, Class B 42,738,750, Class C 62,784,250, Class D 42,738,750) at June 30, 2016, and December 31, 2015	1	
 	 	1	
 	
Additional paid-in capital	1,835	
 	 	1,855	
 	
Retained earnings	26	
 	 	12	
 	
Accumulated other comprehensive loss	(47	)	 	(27	)	
Noncontrolling interest	840	
 	 	897	
 	
Total Stockholders' Equity	2,655	
 	 	2,738	
 	
Total Liabilities and Stockholders' Equity	$	8,508	
 	 	$	8,689	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.
See accompanying notes to consolidated financial statements.

3

                                            

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 	Six months ended June 30,	
 	2016 (a)	 	2015 (a)	
 	(In millions)	
Cash Flows from Operating Activities	 	 	 	
Net income	$	64	
 	 	$	21	
 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	
Equity in earnings of unconsolidated affiliates	(16	)	 	(7	)	
Distributions from unconsolidated affiliates	22	
 	 	21	
 	
Depreciation, amortization and ARO accretion	150	
 	 	154	
 	
Amortization of financing costs and debt discounts	10	
 	 	6	
 	
Amortization of intangibles and out-of-market contracts	40	
 	 	26	
 	
Adjustment for debt extinguishment	—	
 	 	7	
 	
Changes in income taxes	12	
 	 	—	
 	
Changes in derivative instruments	(1	)	 	(36	)	
Disposal of asset components	3	
 	 	1	
 	
Changes in prepaid and accrued capacity payments	(65	)	 	(66	)	
Changes in other working capital	(4	)	 	(29	)	
Net Cash Provided by Operating Activities	215	
 	 	98	
 	
Cash Flows from Investing Activities	 	 	 	
Acquisition of businesses, net of cash acquired	—	
 	 	(37	)	
Acquisition of Drop Down Assets, net of cash acquired	—	
 	 	(489	)	
Capital expenditures	(11	)	 	(9	)	
Decrease in restricted cash	7	
 	 	20	
 	
Decrease in notes receivable	9	
 	 	8	
 	
Return of investment from unconsolidated affiliates	18	
 	 	15	
 	
Investments in unconsolidated affiliates	(59	)	 	(328	)	
Other	2	
 	 	—	
 	
Net Cash Used in Investing Activities	(34	)	 	(820	)	
Cash Flows from Financing Activities	 	 	 	
Net contributions from noncontrolling interests	8	
 	 	123	
 	
Distributions to NRG for NRG Wind TE Holdco	(6	)	 	—	
 	
Distributions and return of capital to NRG prior to CVSR Drop Down	(12	)	 	(12	)	
Proceeds from the issuance of common stock	—	
 	 	600	
 	
Payment of dividends and distributions to shareholders	(83	)	 	(61	)	
Payment of debt issuance costs	—	
 	 	(11	)	
Net borrowings from the revolving credit facility	12	
 	 	267	
 	
Proceeds from the issuance of long-term debt	—	
 	 	293	
 	
Payments of long-term debt	(122	)	 	(599	)	
Net Cash (Used in) Provided by Financing Activities	(203	)	 	600	
 	
Net Decrease in Cash and Cash Equivalents	(22	)	 	(122	)	
Cash and Cash Equivalents at Beginning of Period	111	
 	 	429	
 	
Cash and Cash Equivalents at End of Period	$	89	
 	 	$	307	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.
See accompanying notes to consolidated financial statements.

4

                                            

NRG YIELD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Nature of Business
NRG Yield, Inc., together with its consolidated subsidiaries, or the Company, is a dividend growth-oriented company formed by NRG as a Delaware corporation on December 20, 2012, to serve as the primary vehicle through which NRG owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. NRG Yield, Inc. owns 100% of the Class A units and Class C units of NRG Yield LLC, including a controlling interest through its position as managing member. NRG Yield LLC, through its wholly owned subsidiary, NRG Yield Operating LLC, is the holder of a portfolio of renewable and conventional generation and thermal infrastructure assets, primarily located in the Northeast, Southwest and California regions of the U.S.
NRG Yield, Inc. consolidates the results of NRG Yield LLC through its controlling interest, with NRG's interest shown as noncontrolling interest in the financial statements. On May 14, 2015, NRG Yield, Inc. completed a stock split whereby each outstanding share of Class A common stock was split into one share of Class A common stock and one share of Class C common stock, and each outstanding share of Class B common stock was split into one share of Class B common stock and one share of Class D common stock. The stock split is referred to as the Recapitalization and all references to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retrospectively adjusted to reflect the Recapitalization. In addition, on June 29, 2015, NRG Yield, Inc. completed the issuance of 28,198,000 shares of Class C common stock for net proceeds of $599 million. The holders of NRG Yield, Inc.'s outstanding shares of Class A and Class C common stock are entitled to dividends as declared. NRG receives its distributions from NRG Yield LLC through its ownership of NRG Yield LLC Class B and Class D units.
The following table represents the structure of the Company as of June 30, 2016:

5

                                            

As of June 30, 2016, the Company's operating assets are comprised of the following projects:

Projects	 	Percentage Ownership	 	Net Capacity (MW) (a)	 	Offtake Counterparty	 	Expiration	
Conventional	 	 	 	 	 	 	 	 	
El Segundo	 	100	%	 	550	
 	 	Southern California Edison	 	2023	
GenConn Devon	 	50	%	 	95	
 	 	Connecticut Light & Power	 	2040	
GenConn Middletown	 	50	%	 	95	
 	 	Connecticut Light & Power	 	2041	
Marsh Landing	 	100	%	 	720	
 	 	Pacific Gas and Electric	 	2023	
Walnut Creek	 	100	%	 	485	
 	 	Southern California Edison	 	2023	
 	 	 	 	1,945	
 	 	 	 	 	
Utility Scale Solar	 	 	 	 	 	 	 	 	
Alpine	 	100	%	 	66	
 	 	Pacific Gas and Electric	 	2033	
Avenal	 	50	%	 	23	
 	 	Pacific Gas and Electric	 	2031	
Avra Valley	 	100	%	 	26	
 	 	Tucson Electric Power	 	2032	
Blythe	 	100	%	 	21	
 	 	Southern California Edison	 	2029	
Borrego	 	100	%	 	26	
 	 	San Diego Gas and Electric	 	2038	
CVSR	 	100	%	 	250	
 	 	Pacific Gas and Electric	 	2038	
Desert Sunlight 250	 	25	%	 	63	
 	 	Southern California Edison	 	2035	
Desert Sunlight 300	 	25	%	 	75	
 	 	Pacific Gas and Electric	 	2040	
Kansas South	 	100	%	 	20	
 	 	Pacific Gas and Electric	 	2033	
Roadrunner	 	100	%	 	20	
 	 	El Paso Electric	 	2031	
TA High Desert	 	100	%	 	20	
 	 	Southern California Edison	 	2033	
 	 	 	 	610	
 	 	 	 	 	
Distributed Solar	 	 	 	 	 	 	 	 	
AZ DG Solar Projects	 	100	%	 	5	
 	 	Various	 	2025 - 2033	
PFMG DG Solar Projects	 	51	%	 	4	
 	 	Various	 	2032	
 	 	 	 	9	
 	 	 	 	 	
Wind	 	 	 	 	 	 	 	 	
Alta I	 	100	%	 	150	
 	 	Southern California Edison	 	2035	
Alta II	 	100	%	 	150	
 	 	Southern California Edison	 	2035	
Alta III	 	100	%	 	150	
 	 	Southern California Edison	 	2035	
Alta IV	 	100	%	 	102	
 	 	Southern California Edison	 	2035	
Alta V	 	100	%	 	168	
 	 	Southern California Edison	 	2035	
Alta X (b)	 	100	%	 	137	
 	 	Southern California Edison	 	2038	
Alta XI (b)	 	100	%	 	90	
 	 	Southern California Edison	 	2038	
Buffalo Bear	 	100	%	 	19	
 	 	Western Farmers Electric Co-operative	 	2033	
Crosswinds	 	74.3	%	 	16	
 	 	Corn Belt Power Cooperative	 	2027	
Elbow Creek	 	75	%	 	92	
 	 	NRG Power Marketing LLC	 	2022	
Elkhorn Ridge	 	50.3	%	 	41	
 	 	Nebraska Public Power District	 	2029	
Forward	 	75	%	 	22	
 	 	Constellation NewEnergy, Inc.	 	2017	
Goat Wind	 	74.9	%	 	113	
 	 	Dow Pipeline Company	 	2025	
Hardin	 	74.3	%	 	11	
 	 	Interstate Power and Light Company	 	2027	
Laredo Ridge	 	100	%	 	80	
 	 	Nebraska Public Power District	 	2031	
Lookout	 	75	%	 	29	
 	 	Southern Maryland Electric Cooperative	 	2030	
Odin	 	74.9	%	 	15	
 	 	Missouri River Energy Services	 	2028	
Pinnacle	 	100	%	 	55	
 	 	Maryland Department of General Services and University System of Maryland	 	2031	
San Juan Mesa	 	56.3	%	 	68	
 	 	Southwestern Public Service Company	 	2025	
Sleeping Bear	 	75	%	 	71	
 	 	Public Service Company of Oklahoma	 	2032	
South Trent	 	100	%	 	101	
 	 	AEP Energy Partners	 	2029	
Spanish Fork	 	75	%	 	14	
 	 	PacifiCorp	 	2028	
Spring Canyon II (b)	 	90.1	%	 	29	
 	 	Platte River Power Authority	 	2039	
Spring Canyon III (b)	 	90.1	%	 	25	
 	 	Platte River Power Authority	 	2039	
Taloga	 	100	%	 	130	
 	 	Oklahoma Gas & Electric	 	2031	
Wildorado	 	74.9	%	 	121	
 	 	Southwestern Public Service Company	 	2027	
 	 	 	 	1,999	

6

                                            

 	 	 	 	 	 	 	 	 	 	 	
Projects	 	Percentage Ownership	 	Net Capacity (MW) (a)	 	Offtake Counterparty	 	Expiration	
Thermal	 	 	 	 	 	 	 	 	
Thermal equivalent MWt (c)	 	100	%	 	1,315	
 	 	Various	 	Various	
NRG Dover Energy Center LLC	 	100	%	 	103	
 	 	NRG Power Marketing LLC	 	2018	
Thermal generation	 	100	%	 	20	
 	 	Various	 	Various	
Total net capacity (excluding equivalent MWt)(d)	 	 	 	4,686	

 	

(a) Net capacity represents the maximum, or rated, generating capacity of the facility multiplied by the Company's percentage ownership in the facility as of June 30, 2016.
(b)  Projects are part of tax equity arrangements.
(c)  For thermal energy, net capacity represents MWt for steam or chilled water and excludes 134 MWt available under the right-to-use provisions contained in agreements between two of the Company's thermal facilities and certain of its customers.
(d)  Total net capacity excludes 55 MW for RPV Holdco and 45 MW for DGPV Holdco 1 and DGPV Holdco 2, which are consolidated by NRG, as further described in Note 4,  Variable Interest Entities, or VIEs .

Substantially all of the Company's generation assets are under long-term contractual arrangements for the output or capacity from these assets. The thermal assets are comprised of district energy systems and combined heat and power plants that produce steam, hot water and/or chilled water and in some instances, electricity, at a central plant. Three out of the fourteen district energy systems are subject to rate regulation by state public utility commissions while the other district energy systems have rates determined by negotiated bilateral contracts.
As described in Note 11, Related Party Transactions, the Company has a management services agreement with NRG for various services, including human resources, accounting, tax, legal, information systems, treasury, and risk management.
Stockholders' equity represents the equity associated with the Class A and Class C common stockholders, with the equity associated with the Class B and Class D common stockholder, NRG, and the third-party interests under certain tax equity arrangements classified as noncontrolling interest.
As described in Note 3, Business Acquisitions, on November 3, 2015, the Company acquired 75% of the Class B interests of NRG Wind TE Holdco, or the November 2015 Drop Down Assets, from NRG for cash consideration of $209 million. In February 2016, NRG made a final working capital payment of $2 million, reducing total cash consideration to $207 million. Additionally, on January 2, 2015, the Company acquired the Laredo Ridge, Tapestry, and Walnut Creek projects, or the January 2015 Drop Down Assets, for total cash consideration of $489 million, including $9 million for working capital. In addition, as described in Note 3,  Business Acquisitions , the Company acquired the remaining 51.05% of CVSR, or the CVSR Drop Down, on September 1, 2016, for cash consideration of $78.5 million. The acquisitions of the CVSR Drop Down, the November 2015 Drop Down Assets and the January 2015 Drop Down Assets, or collectively, the Drop Down Assets, were accounted for as transfers of entities under common control. The accounting guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Accordingly, the Company prepared its consolidated financial statements to reflect the transfers as if they had taken place from the beginning of the financial statements period or from the date the entities were under common control (if later than the beginning of the financial statements period), which was April 1, 2014 for the January Drop Down Assets and the majority of the November 2015 Drop Down Assets. The recast did not affect net income attributable to NRG Yield, Inc., weighted average number of shares outstanding, earnings per share or dividends. With respect to the November 2015 Drop Down Assets, the Company has recorded all minority interests in NRG Wind TE Holdco as noncontrolling interest in the Consolidated Financial Statements for all periods presented.
With respect to the CVSR Drop Down, prior to the transaction, the Company recorded its 48.95% interest in CVSR as an equity method investment. In connection with the retrospective adjustment of prior periods, the Company has removed the equity method investment from all prior periods and adjusted its financial statements to reflect its results of operations, financial position and cash flows as if it had consolidated CVSR from the beginning of the financial statement period.
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the SEC’s regulations for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. 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 audited consolidated financial statements for the year ended December 31, 2015. Interim results are not necessarily indicative of results for a full year.
In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company's consolidated financial position as of June 30, 2016, and the results of operations, comprehensive income and cash flows for the six months ended June 30, 2016, and 2015.

7

                                            

Note 2 — Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during the reporting period. Actual results could be different from these estimates.
Noncontrolling Interests
The following table reflects the changes in the Company's noncontrolling interest balance:

 	(In millions)	
Balance as of December 31, 2015	$	897	
 	
Capital contributions from tax equity investors, net of distributions	8	
 	
November 2015 Drop Down Assets working capital payment	2	
 	
Comprehensive loss	(14	)	
Distributions to NRG	(57	)	
Pre-acquisition net income of Drop Down assets	$	4	
 	
Balance as of June 30, 2016	$	840	
 	
Distributions to NRG
The following table lists the distributions paid on NRG Yield LLC's Class B and D units during the six months ended June 30, 2016:

 	Second Quarter 2016	 	First Quarter 2016	
Distributions per Class B Unit	$	0.23	
 	 	$	0.225	
 	
Distributions per Class D Unit	$	0.23	
 	 	$	0.225	
 	
On July 26, 2016, NRG Yield LLC declared a distribution on its units of $0.24 per unit payable on September 15, 2016 to unit holders of record as of September 1, 2016. The portion of the distributions paid by NRG Yield LLC to NRG is recorded as a reduction to the Company's noncontrolling interest balance.
Additionally, the Company paid $6 million to NRG relating to its noncontrolling interest in NRG Wind TE Holdco for the six months ended June 30, 2016.
NRG Indemnity Receivable
As of June 30, 2016, $75 million remains receivable as the balance is expected to be fully recovered from the current litigation with SunPower pursuant to the existing indemnity on the project. In addition, $7 million is payable to SunPower related to amounts that SunPower overpaid for liquidated damages pursuant to the project indemnities. The agreement between NRG and the Company for the CVSR Drop Down specified that all amounts related to the litigation with SunPower are excluded from the acquisition. Accordingly, prior to close of the transaction, the $75 million receivable and $7 million payable were transferred to NRG as a net reduction to its ownership interest in CVSR.
Recent Accounting Developments
ASU 2016-07 — In March 2016, the FASB issued ASU No. 2016-07, Investments - Equity Method and Joint Ventures  (Topic 323), or ASU No. 2016-07. The amendments of ASU No. 2016-07 eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting with no retroactive adjustment to the investment. In addition, ASU No. 2016-07 requires that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting

8

                                            

recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The guidance in ASU No. 2016-07 is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. The adoption of ASU No. 2016-07 is required to be applied prospectively and early adoption is permitted. The Company does not expect the standard to have a material impact on its results of operations, cash flows and financial position.
ASU 2016-02 — In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), or ASU No. 2016-02. The amendments of ASU No. 2016-02 complete the joint effort between the FASB and the International Accounting Standards Board, or IASB, to develop a common leasing standard for GAAP and International Financial Reporting Standards, or IFRS, with the objective to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and to improve financial reporting. The guidance in ASU No. 2016-02 provides that a lessee that may have previously accounted for a lease as an operating lease under current GAAP should recognize the assets and liabilities that arise from a lease on the balance sheet. In addition, ASU No. 2016-02 expands the required quantitative and qualitative disclosures with regards to lease arrangements. The guidance in ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. The adoption of ASU No. 2016-02 is required to be applied using a modified retrospective approach for the earliest period presented and early adoption is permitted. The Company is currently evaluating the impact of the standard on the Company's results of operations, cash flows and financial position.
ASU 2016-01 — In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , or ASU No. 2016-01. The amendments of ASU No. 2016-01 eliminate available-for-sale classification of equity investments and require that equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be generally measured at fair value with changes in fair value recognized in net income.  Further, the amendments require financial assets and financial liabilities to be presented separately in the notes to the financial statements, grouped by measurement category and form of financial asset.  The guidance in ASU No. 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those annual periods. The Company is currently evaluating the impact of the standard on the Company's results of operations, cash flows and financial position.
ASU 2015-16 — In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments , or ASU No. 2015-16. The amendments of ASU No. 2015-16 require that an acquirer recognize measurement period adjustments to the provisional amounts recognized in a business combination in the reporting period during which the adjustments are determined. Additionally, the amendments of ASU No. 2015-16 require the acquirer to record in the same period's financial statements the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the measurement period adjustment, calculated as if the accounting had been completed at the acquisition date as well as disclosing on either the face of the income statement or in the notes the portion of the amount recorded in current period earnings that would have been recorded in previous reporting periods. The guidance in ASU No. 2015-16 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The amendments should be applied prospectively. The Company adopted this standard on January 1, 2016, and the adoption of this standard did not impact the Company's results of operations, cash flows or financial position. 
ASU 2014-09 — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU No. 2014-09.  The amendments of ASU No. 2014-09 complete the joint effort between the FASB and the International Accounting Standards Board, or IASB, to develop a common revenue standard for GAAP and International Financial Reporting Standards, or IFRS, and to improve financial reporting.  The guidance in ASU No. 2014-09 provides that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for the goods or services provided and establishes the following steps to be applied by an entity: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies the performance obligation.  In August 2015, the FASB issued ASU 2015-14, which formally deferred the effective date by one year to make the guidance of ASU No. 2014-09 effective for annual reporting periods beginning after December 15, 2017, including interim periods therein.  Early adoption is permitted, but not prior to the original effective date, which was for annual reporting periods beginning after December 15, 2016.
In addition to ASU No. 2014-09, the FASB has issued additional guidance which provides further clarification on Topic 606. In March 2016, the FASB issued ASU No. 2016-08,  Revenue from Contracts with Customers  (Topic 606), or ASU No. 2016-08. The amendments of ASU No. 2016-08 clarify how to apply the implementation guidance on principal versus agent considerations related to the sale of goods or services to a customer as updated by ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10,  Revenue from Contracts with Customers  (Topic 606), or ASU No. 2016-10. The amendments of ASU No. 2016-10 provide further clarification on contract revenue recognition as updated by ASU No. 2014-09, specifically related to the identification of separately identifiable performance obligations and the implementation of licensing contracts. In May 2016, the

9

                                            

FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606), or ASU No. 2016-12. The amendments of ASU No. 2016-12 provide further clarification on contract revenue recognition as updated by ASU No. 2014-09, specifically related to collectability, the presentation of tax collected from customers, and non-cash consideration, as well as offering practical expedients. The Company is working through an adoption plan which includes the evaluation of revenue contracts compared to the new standard and evaluating the impact of Topic 606 on the Company's results of operations, cash flows and financial position.

Note 3 — Business Acquisitions
2016 Acquisitions
CVSR Drop Down from NRG — On September 1, 2016, the Company acquired from NRG the remaining 51.05% interest of CVSR Holdco LLC, which indirectly owns the CVSR solar facility, for total cash consideration of $78.5 million, subject to working capital adjustments and plus assumed non-recourse project debt. The acquisition was funded with cash on hand.
The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50,  Business Combinations - Related Issues . The difference between the cash paid and historical value of the entities' equity was recorded as a contribution from NRG with the offset to noncontrolling interest. Because the transaction constituted a transfer of net assets under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Prior to the transaction, the Company recorded its 48.95% interest in CVSR as an equity method investment. In connection with the retrospective adjustment of prior periods, the Company has removed the equity method investment from all prior periods and adjusted its financial statements to reflect its results of operations, financial position and cash flows as if it had consolidated CVSR from the beginning of the financial statement period.
In connection with the acquisition and prior to close of the transaction, a $68 million net receivable resulting from the litigation with SunPower, as described in Note 2,  Summary of Significant Accounting Policies,  was transferred to NRG as a reduction to its ownership interest in the Company.
2015 Acquisitions
November 2015 Drop Down Assets from NRG — On November 3, 2015, the Company acquired the November 2015 Drop Down Assets, a portfolio of 12 wind facilities totaling 814 net MW, from NRG for cash consideration of $209 million, subject to working capital adjustments. In February 2016, NRG made a final working capital payment of $2 million, reducing total cash consideration to $207 million. The Company is responsible for its pro-rata share of non-recourse project debt of $193 million and noncontrolling interest associated with a tax equity structure of $159 million (as of the acquisition date).
The Company funded the acquisition with borrowings from its revolving credit facility. The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost. The difference between the cash paid and historical value of the entities' equity was recorded as a distribution from NRG with the offset to noncontrolling interest.
The Class A interests of NRG Wind TE Holdco are owned by a tax equity investor, or TE Investor, who receives 99% of allocations of taxable income and other items until the flip point, which occurs when the TE Investor obtains a specified return on its initial investment, at which time the allocations to the TE Investor change to 8.53%. The Company generally receives 75% of CAFD until the flip point, at which time the allocations to the Company of CAFD change to 68.60%. If the flip point has not occurred by a specified date, 100% of CAFD is allocated to the TE Investor until the flip point occurs. NRG Wind TE Holdco is a VIE and the Company is the primary beneficiary, through its position as managing member, and consolidates NRG Wind TE Holdco.
Desert Sunlight — On June 29, 2015, the Company acquired 25% of the membership interest in Desert Sunlight Investment Holdings, LLC, which owns two solar photovoltaic facilities that total 550 MW, located in Desert Center, California from EFS Desert Sun, LLC, an affiliate of GE Energy Financial Services for a purchase price of $285 million. Power generated by the facilities is sold to Southern California Edison and Pacific Gas and Electric under long-term PPAs with approximately 20 years and 25 years of remaining contract life, respectively. The Company accounts for its 25% investment as an equity method investment.
Spring Canyon — On May 7, 2015, the Company acquired a 90.1% interest in Spring Canyon II, a 32 MW wind facility, and Spring Canyon III, a 28 MW wind facility, each located in Logan County, Colorado, from Invenergy Wind Global LLC. The purchase price was funded with cash on hand. Power generated by Spring Canyon II and Spring Canyon III is sold to Platte River Power Authority under long-term PPAs with approximately 24 years of remaining contract life.

10

                                            

University of Bridgeport Fuel Cell— On April 30, 2015, the Company completed the acquisition of the University of Bridgeport Fuel Cell project in Bridgeport, Connecticut from FuelCell Energy, Inc. The project added an additional 1.4 MW of thermal capacity to the Company's portfolio, with a 12-year contract, with the option for a 7-year extension. The acquisition is reflected in the Company's Thermal segment.
January 2015 Drop Down Assets from NRG — On January 2, 2015, the Company acquired the following projects from NRG: (i) Laredo Ridge, an 80 MW wind facility located in Petersburg, Nebraska, (ii) Tapestry, which includes Buffalo Bear, a 19 MW wind facility in Buffalo, Oklahoma; Taloga, a 130 MW wind facility in Putnam, Oklahoma; and Pinnacle, a 55 MW wind facility in Keyser, West Virginia, and (iii)  Walnut Creek, a 485 MW natural gas facility located in City of Industry, California, for total cash consideration of $489 million, including $9 million for working capital, plus assumed project-level debt of $737 million. The Company funded the acquisition with cash on hand and drawings under its revolving credit facility. The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost. The difference between the cash paid and the historical value of the entities' equity of $61 million, as well as $23 million of AOCL, was recorded as a distribution to NRG and reduced the balance of its noncontrolling interest.

Note 4 — Variable Interest Entities, or VIEs
Entities that are Consolidated
The Company has a controlling financial interest in certain entities which have been identified as VIEs under ASC 810, Consolidations,  or ASC 810. These arrangements are primarily related to tax equity arrangements entered into with third parties in order to monetize certain tax credits associated with wind facilities, as further described in Note 5,  Investments Accounted for by the Equity Method and Variable Interest Entities,  to the Company's audited consolidated financial statements included in the 2015 Form 10-K.
Summarized financial information for the Company's consolidated VIEs consisted of the following as of June 30, 2016:

(In millions)	NRG Wind TE Holdco	 	Alta Wind TE Holdco	 	Spring Canyon	
Other current and non-current assets	$	190	
 	 	$	27	
 	 	$	4	
 	
Property, plant and equipment	638	
 	 	472	
 	 	102	
 	
Intangible assets	2	
 	 	281	
 	 	—	
 	
Total assets	830	
 	 	780	
 	 	106	
 	
Current and non-current liabilities	215	
 	 	8	
 	 	6	
 	
Total liabilities	215	
 	 	8	
 	 	6	
 	
Noncontrolling interest	235	
 	 	121	
 	 	70	
 	
Net assets less noncontrolling interests	$	380	
 	 	$	651	
 	 	$	30	
 	
Entities that are not Consolidated
The Company has interests in entities that are considered VIEs under ASC 810, but for which it is not considered the primary beneficiary.  The Company accounts for its interests in these entities under the equity method of accounting, as further described in Note 5,  Investments Accounted for by the Equity Method and Variable Interest Entities,  to the Company's audited consolidated financial statements included in the 2015 Form 10-K.
NRG DGPV Holdco 1 LLC — The Company and NRG, maintain a partnership, NRG DGPV Holdco 1 LLC, or DGPV Holdco 1, the purpose of which is to own or purchase solar power generation projects and other ancillary related assets from NRG Renew LLC or its subsidiaries, via intermediate funds, including: (i) a tax equity-financed portfolio of 10 recently completed community solar projects representing approximately 8 MW with a weighted average remaining PPA term of 20 years; and (ii) a tax equity-financed portfolio of approximately 12 commercial photovoltaic systems representing approximately 37 MW with a weighted average remaining PPA term of 19 years. Both of these investments relate to the Company's $100 million commitment to distributed solar projects in partnership with NRG.
NRG DGPV Holdco 2 LLC — On February 29, 2016,the Company and NRG entered into an additional partnership by forming NRG DGPV Holdco 2 LLC, or DGPV Holdco 2, to own or purchase solar power generation projects and other ancillary related assets from NRG Renew LLC or its subsidiaries, via intermediate funds.  Under this partnership, the Company committed to fund up to $50 million of capital. 

11

                                            

The Company's maximum exposure to loss is limited to its equity investment in DGPV Holdco 1 and DGPV Holdco 2, which was $78 million on a combined basis as of June 30, 2016.
NRG RPV Holdco 1 LLC — The Company and NRG Residential Solar Solutions LLC, a subsidiary of NRG, maintain a partnership, NRG RPV Holdco 1 LLC, or RPV Holdco, that holds operating portfolios of residential solar assets developed by NRG Home Solar, a subsidiary of NRG, including: (i) an existing, unlevered portfolio of over 2,200 leases across nine states representing approximately 17 MW with a weighted average remaining lease term of approximately 17 years; and (ii) a tax equity-financed portfolio of approximately 5,500 leases representing approximately 38 MW, with an average lease term for the existing and new leases of approximately 17 to 20 years. Under this partnership, the Company had previously committed to fund up to $150 million of capital, which was reduced to $100 million in February 2016.
The Company's maximum exposure to loss is limited to its equity investment, which was $67 million as of June 30, 2016.
On August 5, 2016, the Company and NRG amended the RPV Holdco partnership to further reduce the aggregate commitment of $100 million to $60 million in connection with NRG’s change in business model approach in the residential solar business.
GenConn Energy LLC — The Company has a 50% interest in GCE Holding LLC, the owner of GenConn, which owns and operates two 190 MW peaking generation facilities in Connecticut at the Devon and Middletown sites. As of June 30, 2016, the Company's investment in GenConn was $108 million and its maximum exposure to loss is limited to its equity investment.
The following table presents summarized financial information for GCE Holding LLC:

 	Three months ended June 30,	 	Six months ended June 30,	
(In millions)	2016	 	2015	 	2016	 	2015	
Income Statement Data:	 	 	 	
Operating revenues	$	18	
 	 	$	18	
 	 	$	36	
 	 	$	40	
 	
Operating income	10	
 	 	11	
 	 	19	
 	 	20	
 	
Net income	$	6	
 	 	$	8	
 	 	$	13	
 	 	$	14	

 	
 	 	 	 	 	 	 	 	
 	June 30, 2016	 	December 31, 2015	
Balance Sheet Data:	(In millions)	
Current assets	$	34	
 	 	$	36	
 	
Non-current assets	408	
 	 	416	
 	
Current liabilities	14	
 	 	16	
 	
Non-current liabilities	$	211	
 	 	$	215	
 	
Note 5 — Fair Value of Financial Instruments
Fair Value Accounting under ASC 820
ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
 	 	
•	Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.	
 	 	
•	Level 2—inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.	
 	 	
•	Level 3—unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.	
In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement.
For cash and cash equivalents, restricted cash, accounts receivable, accounts receivable — affiliate, accounts payable, accounts payable — affiliate, accrued expenses and other liabilities, the carrying amounts approximate fair value because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.

12

                                            

The estimated carrying amounts and fair values of the Company’s recorded financial instruments not carried at fair market value are as follows:

 	As of June 30, 2016	 	As of December 31, 2015	
 	Carrying Amount	 	Fair Value	 	Carrying Amount	 	Fair Value	
(In millions)	 	
Assets:	 	 	 	 	 	 	 	
Notes receivable, including current portion	$	38	
 	 	$	38	
 	 	$	47	
 	 	$	47	
 	
Liabilities:	 	 	 	 	 	 	 	
Long-term debt, including current portion	$	5,552	
 	 	$	5,552	
 	 	$	5,656	
 	 	$	5,538	
 	
The fair value of notes receivable and long-term debt are based on expected future cash flows discounted at market interest rates, or current interest rates for similar instruments, and are classified as Level 3 within the fair value hierarchy.
Recurring Fair Value Measurements
The Company records its derivative assets and liabilities at fair value on its consolidated balance sheet. There were no derivative asset positions on the Company's consolidated balance sheet as of December 31, 2015. The following table presents assets and liabilities measured and recorded at fair value on the Company's consolidated balance sheets on a recurring basis and their level within the fair value hierarchy:

 	As of June 30, 2016	 	As of December 31, 2015	
 	Fair Value (a)	 	Fair Value (a)	
(In millions)	Level 2	 	Level 2	
Derivative assets:	 	 	 	
Commodity contracts	$	1	
 	 	$	—	
 	
Total assets	1	
 	 	—	
 	
Derivative liabilities:	 	 	 	
Commodity contracts	—	
 	 	2	
 	
Interest rate contracts	159	
 	 	98	
 	
Total liabilities	$	159	
 	 	$	100	

 	

(a)  There were no assets or liabilities classified as Level 1 or Level 3 as of June 30, 2016, and December 31, 2015.
Derivative Fair Value Measurements
The Company's contracts are non-exchange-traded and valued using prices provided by external sources. For the Company’s energy markets, management receives quotes from multiple sources. To the extent that multiple quotes are received, the prices reflect the average of the bid-ask mid-point prices obtained from all sources believed to provide the most liquid market for the commodity.
The fair value of each contract is discounted using a risk free interest rate. In addition, a credit reserve is applied to reflect credit risk, which is, for interest rate swaps, calculated based on credit default swaps using the bilateral method. For commodities, to the extent that the net exposure under a specific master agreement is an asset, the Company uses the counterparty’s default swap rate. If the net exposure under a specific master agreement is a liability, the Company uses NRG's default swap rate. For interest rate swaps and commodities, the credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the liabilities or that a market participant would be willing to pay for the assets. As of June 30, 2016, the credit reserve resulted in a $5 million increase in fair value, which was composed of a $4 million gain in OCI and $1 million gain in interest expense. It is possible that future market prices could vary from those used in recording assets and liabilities and such variations could be material.

13

                                            

Concentration of Credit Risk
In addition to the credit risk discussion in Note 2, Summary of Significant Accounting Policies,to the Company's audited consolidated financial statements included in the Company's 2015 Form 10-K , the following is a discussion of the concentration of credit risk for the Company's financial instruments. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. The Company monitors and manages credit risk through credit policies that include: (i) an established credit approval process; (ii) daily monitoring of counterparties' credit limits; (iii) the use of credit mitigation measures such as margin, collateral, prepayment arrangements, or volumetric limits; (iv) the use of payment netting agreements; and (v) the use of master netting agreements that allow for the netting of positive and negative exposures of various contracts associated with a single counterparty. Risks surrounding counterparty performance and credit could ultimately impact the amount and timing of expected cash flows. The Company seeks to mitigate counterparty risk by having a diversified portfolio of counterparties.
Counterparty credit exposure includes credit risk exposure under certain long-term agreements, including solar and other PPAs. As external sources or observable market quotes are not available to estimate such exposure, the Company estimates the exposure related to these contracts based on various techniques including, but not limited to, internal models based on a fundamental analysis of the market and extrapolation of observable market data with similar characteristics. Based on these valuation techniques, as of June 30, 2016, credit risk exposure to these counterparties attributable to the Company's ownership interests was approximately $2.6 billion for the next five years. The majority of these power contracts are with utilities with strong credit quality and public utility commission or other regulatory support, as further described in Note 12,  Segment Reporting ,  to the Company's audited consolidated financial statements included in the Company's 2015 Form 10-K.   However, such regulated utility counterparties can be impacted by changes in government regulations, which the Company is unable to predict.

Note 6 — Accounting for Derivative Instruments and Hedging Activities
This footnote should be read in conjunction with the complete description under Note 7, Accounting for Derivative Instruments and Hedging Activities , to the Company's audited consolidated financial statements included in the Company's 2015 Form 10-K .
Energy-Related Commodities
As of June 30, 2016, the Company had forward contracts for the purchase of fuel commodities relating to the forecasted usage of the Company’s district energy centers extending through 2018. At June 30, 2016, these contracts were not designated as cash flow or fair value hedges.

Interest Rate Swaps
As of June 30, 2016, the Company had interest rate derivative instruments on non-recourse debt extending through 2031, most of which are designated as cash flow hedges.
Volumetric Underlying Derivative Transactions
The following table summarizes the net notional volume buy/(sell) of the Company's open derivative transactions broken out by commodity as of June 30, 2016, and December 31, 2015.

 	 	 	Total Volume	
 	 	 	June 30, 2016	 	December 31, 2015	
Commodity	Units	 	(In millions)	
Natural Gas	MMBtu	 	4	
 	 	4	
 	
Interest	Dollars	 	$	1,932	
 	 	$	1,991	

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Fair Value of Derivative Instruments
There were no derivative asset positions on the balance sheet as of December 31, 2015. The following table summarizes the fair value within the derivative instrument valuation on the balance sheet:

 	Fair Value	
 	Derivative Assets	 	Derivative Liabilities	
 	June 30, 2016	 	June 30, 2016	 	December 31, 2015	
 	(In millions)	
Derivatives Designated as Cash Flow Hedges:	 	 	 	 	 	
Interest rate contracts current	$	—	
 	 	$	34	
 	 	$	34	
 	
Interest rate contracts long-term	—	
 	 	108	
 	 	56	
 	
Total Derivatives Designated as Cash Flow Hedges	—	
 	 	142	
 	 	90	
 	
Derivatives Not Designated as Cash Flow Hedges:	 	 	 	 	 	
Interest rate contracts current	—	
 	 	3	
 	 	3	
 	
Interest rate contracts long-term	—	
 	 	14	
 	 	5	
 	
Commodity contracts current	1	
 	 	—	
 	 	2	
 	
Total Derivatives Not Designated as Cash Flow Hedges	1	
 	 	17	
 	 	10	
 	
Total Derivatives	$	1	
 	 	$	159	
 	 	$	100	
 	
The Company has elected to present derivative assets and liabilities on the balance sheet on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. As of June 30, 2016, and December 31, 2015, there were no offsetting amounts at the counterparty master agreement level or outstanding collateral paid or received.

 	

 	
 	
Accumulated Other Comprehensive Loss
The following table summarizes the effects on the Company’s accumulated OCL balance attributable to interest rate swaps designated as cash flow hedge derivatives, net of tax:

 	Three months ended June 30,	 	Six months ended June 30,	
 	2016	 	2015	 	2016	 	2015	
 	(In millions)	
Accumulated OCL beginning balance	$	(124	)	 	$	(96	)	 	$	(83	)	 	$	(76	)	
Reclassified from accumulated OCL to income due to realization of previously deferred amounts	3	
 	 	4	
 	 	6	
 	 	7	
 	
Mark-to-market of cash flow hedge accounting contracts	(19	)	 	19	
 	 	(63	)	 	(4	)	
Accumulated OCL ending balance, net of income tax benefit of $28 and $10, respectively	$	(140	)	 	$	(73	)	 	$	(140	)	 	$	(73	)	
Accumulated OCL attributable to noncontrolling interests	(93	)	 	(57	)	 	(93	)	 	(57	)	
Accumulated OCL attributable to NRG Yield, Inc.	$	(47	)	 	$	(16	)	 	$	(47	)	 	$	(16	)	
Losses expected to be realized from OCL during the next 12 months, net of income tax benefit of $4	$	(19	)	 	 	 	$	(19	)	 	 	
Amounts reclassified from accumulated OCL into income and amounts recognized in income from the ineffective portion of cash flow hedges are recorded to interest expense. There was no ineffectiveness for the six months ended June 30, 2016, and 2015.
Impact of Derivative Instruments on the Statements of Income
The Company has interest rate derivative instruments that are not designated as cash flow hedges. The effect of interest rate hedges is recorded to interest expense. For the three months ended June 30, 2016, and 2015, the impact to the consolidated statements of income was a loss of $2 million and a gain of $31 million, respectively. For the six months ended June 30, 2016, and 2015, the impact to the consolidated statements of income was a loss of $9 million and a gain of $19 million, respectively.

A portion of the Company’s derivative commodity contracts relates to its Thermal Business for the purchase of fuel commodities based on the forecasted usage of the thermal district energy centers. Realized gains and losses on these contracts are reflected in the fuel costs that are permitted to be billed to customers through the related customer contracts or tariffs and, accordingly, no gains or losses are reflected in the consolidated statements of income for these contracts.

15

                                            

Commodity contracts also hedged the forecasted sale of power for Elbow Creek, Alta X and Alta XI in 2015 until the start of the PPAs. The effect of these commodity hedges was recorded to operating revenues. For the three and six months ended June 30, 2015, the impact to the consolidated statements of income was an unrealized loss of $4 million and an unrealized gain of $3 million, respectively.
See Note 5, Fair Value of Financial Instruments, for a discussion regarding concentration of credit risk.

16

                                            

Note 7 — Long-term Debt
This footnote should be read in conjunction with the complete description under Note 9, Long-term Debt, to the Company's audited consolidated financial statements included in the 2015 Form 10-K. Long-term debt consisted of the following:

 	 	June 30, 2016	 	December 31, 2015	 	June 30, 2016, interest rate %  (a)	 	Letters of Credit Outstanding at June 30, 2016	
 	 	(In millions, except rates)	 	 	
2019 Convertible Notes (b)	 	$	333	
 	 	$	330	
 	 	3.500	 	 	
2020 Convertible Notes (c)	 	268	
 	 	266	
 	 	3.250	 	 	
2024 Senior Notes	 	500	
 	 	500	
 	 	5.375	 	 	
NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility, due 2019  (d)	 	318	
 	 	306	
 	 	L+2.75	 	$	67	
 	
Project-level debt:	 	 	 	 	 	 	 	 	
Alpine, due 2022	 	151	
 	 	154	
 	 	L+1.75	 	37	
 	
Alta Wind I, lease financing arrangement, due 2034	 	245	
 	 	252	
 	 	7.015	 	16	
 	
Alta Wind II, lease financing arrangement, due 2034	 	194	
 	 	198	
 	 	5.696	 	23	
 	
Alta Wind III, lease financing arrangement, due 2034	 	201	
 	 	206	
 	 	6.067	 	24	
 	
Alta Wind IV, lease financing arrangement, due 2034	 	130	
 	 	133	
 	 	5.938	 	16	
 	
Alta Wind V, lease financing arrangement, due 2035	 	208	
 	 	213	
 	 	6.071	 	27	
 	
Alta Realty Investments, due 2031	 	32	
 	 	33	
 	 	7.000	 	—	
 	
Alta Wind Asset Management, due 2031	 	18	
 	 	19	
 	 	L+2.375	 	—	
 	
Avra Valley, due 2031	 	58	
 	 	60	
 	 	L+1.75	 	3	
 	
Blythe, due 2028	 	21	
 	 	21	
 	 	L+1.625	 	6	
 	
Borrego, due 2025 and 2038	 	71	
 	 	72	
 	 	L+ 2.50/5.65	 	5	
 	
CVSR, due 2037	 	780	
 	 	793	
 	 	2.339 - 3.775	 	—	
 	
El Segundo Energy Center, due 2023	 	457	
 	 	485	
 	 	L+1.625 - L+2.25	 	82	
 	
Energy Center Minneapolis, due 2017 and 2025	 	100	
 	 	108	
 	 	5.95 -7.25	 	—	
 	
Kansas South, due 2031	 	31	
 	 	33	
 	 	L+2.00	 	4	
 	
Laredo Ridge, due 2028	 	102	
 	 	104	
 	 	L+1.875	 	10	
 	
Marsh Landing, due 2017 and 2023	 	410	
 	 	418	
 	 	L+1.75 - L+1.875	 	45	
 	
PFMG and related subsidiaries financing agreement, due 2030	 	29	
 	 	29	
 	 	6.000	 	—	
 	
Roadrunner, due 2031	 	38	
 	 	40	
 	 	L+1.625	 	5	
 	
South Trent Wind, due 2020	 	59	
 	 	62	
 	 	L+1.625	 	10	
 	
TA High Desert, due 2020 and 2032	 	51	
 	 	52	
 	 	L+2.50/5.15	 	8	
 	
Tapestry, due 2021	 	176	
 	 	181	
 	 	L+1.625	 	20	
 	
Viento, due 2023	 	183	
 	 	189	
 	 	L+2.75	 	27	
 	
Walnut Creek, due 2023	 	341	
 	 	351	
 	 	L+1.625	 	60	
 	
WCEP Holdings, due 2023	 	46	
 	 	46	
 	 	L+3.00	 	—	
 	
Other	 	1	
 	 	2	
 	 	various	 	—	
 	
Subtotal project-level debt:	 	4,133	
 	 	4,254	
 	 	 	 	 	
Total debt	 	5,552	
 	 	5,656	
 	 	 	 	 	
  Less current maturities	 	274	
 	 	264	
 	 	 	 	 	
Less deferred financing costs	 	60	
 	 	63	
 	 	 	 	 	
Total long-term debt	 	$	5,218	
 	 	$	5,329	

 	

(a)  As of June 30, 2016, L+ equals 3 month LIBOR plus x%, except for the Marsh Landing term loan, Walnut Creek term loan, and NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility, where L+ equals 1 month LIBOR plus x% and Kansas South, where L+ equals 6 month LIBOR plus x%.
(b)  Net of discount of $12 million and $15 million as of June 30, 2016, and December 31, 2015, respectively.
(c)  Net of discount of $19 million and $21 million as of June 30, 2016, and December 31, 2015, respectively.
(d)  Applicable rate is determined by the Borrower Leverage Ratio, as defined in the credit agreement.
The financing arrangements listed above contain certain covenants, including financial covenants that the Company is required to be in compliance with during the term of the respective arrangement. As of June 30, 2016, the Company was in compliance with all of the required covenants.

17

                                            

The discussion below describes material changes to or additions of long-term debt for the six months ended June 30, 2016, as well as any other material financing transactions that took place subsequent to June 30, 2016.
CVSR Holdco Financing Arrangement
On July 15, 2016, CVSR Holdco, the indirect owner of the CVSR project, issued $200 million of senior secured notes that bear interest at 4.68% and mature on March 31, 2037.  Net proceeds were distributed to the Company and NRG based on the ownership as of July 15, 2016, and accordingly, the Company received net proceeds of  $97.5 million .  
NRG Yield Operating LLC 2026 Senior Notes
On August 18, 2016, NRG Yield Operating LLC issued $350 million of senior unsecured notes, or the 2026 Senior Notes. The 2026 Senior Notes bear interest of 5.00% and  mature on September 15, 2026. Interest on the notes is payable semi-annually on March 15 and September 15 of each year, and commence on March 15, 2017. The 2026 Senior Notes are senior unsecured obligations of NRG Yield Operating LLC and are guaranteed by NRG Yield LLC, and by certain of Yield Operating LLC’s wholly owned current and future subsidiaries. A portion of the proceeds of the 2026 Senior Notes were used to repay the revolving credit facility as described below.
NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility
The Company borrowed $60 million from the revolving credit facility and repaid $366 million during the eight months ended August 31, 2016. The repayments included the Company's pro rata proceeds of  $97.5 million  from the CVSR Holdco Financing Arrangement, as described above, along with  $28 million  of cash on hand. Additionally, in August 2016, the Company used a portion of its proceeds from the 2026 Senior Notes to pay the remaining revolver balance of $193 million in full as described above.

18

                                            

Note 8 — Earnings Per Share
Basic and diluted earnings (loss) per common share are computed by dividing net income (loss) by the weighted average number of common shares outstanding. Shares issued during the year are weighted for the portion of the year that they were outstanding. The number of shares and per share amounts for the prior periods presented below have been retrospectively restated to reflect the Recapitalization .
The reconciliation of the Company's basic and diluted earnings per share is shown in the following tables:

 	Three months ended June 30,	
 	2016	 	2015	
(In millions, except per share data) (a)	Common Class A	 	Common Class C	 	Common Class A	 	Common Class C	
Basic earnings per share attributable to NRG Yield, Inc. common stockholders	 	 	 	 	 	 	 	
Net income attributable to NRG Yield, Inc.	$	11	
 	 	$	21	
 	 	$	5	
 	 	$	5	
 	
Weighted average number of common shares outstanding - basic	35	
 	 	63	
 	 	35	
 	 	35	
 	
Earnings per weighted average common share — basic	$	0.33	
 	 	$	0.33	
 	 	$	0.15	
 	 	$	0.15	
 	
Diluted earnings per share attributable to NRG Yield, Inc. common stockholders	 	 	 	 	 	 	 	
Net income attributable to NRG Yield, Inc.	$	14	
 	 	$	23	
 	 	$	5	
 	 	$	5	
 	
Weighted average number of common shares outstanding - diluted	49	
 	 	73	
 	 	35	
 	 	35	
 	
Earnings per weighted average common share — diluted	$	0.29	
 	 	$	0.31	
 	 	$	0.15	
 	 	$	0.15	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Six months ended June 30,	
 	2016	 	2015	
(In millions, except per share data) (a)	Common Class A	 	Common Class C	 	Common Class A	 	Common Class C	
Basic and diluted earnings per share attributable to NRG Yield, Inc. common stockholders	 	 	 	 	 	 	 	
Net income attributable to NRG Yield, Inc.	$	13	
 	 	$	24	
 	 	$	3	
 	 	$	3	
 	
Weighted average number of common shares outstanding	35	
 	 	63	
 	 	35	
 	 	35	
 	
Earnings per weighted average common share — basic and diluted	$	0.38	
 	 	$	0.38	
 	 	$	0.07	
 	 	$	0.07	

 	

(a) Net income attributable to NRG Yield, Inc. and basic and diluted earnings per share might not recalculate due to presenting values in millions rather than whole dollars.
With respect to the Class A common stock, there were a total of 15 million anti-dilutive outstanding equity instruments for the six months ended June 30, 2016, and the three and six months ended June 30, 2015, related to the 2019 Convertible Notes. With respect to the Class C common stock, there were a total of 10 million anti-dilutive outstanding equity instruments for the six months ended June 30, 2016 related to the 2020 Convertible Notes.

19

                                            

Note 9 — Segment Reporting
The Company’s segment structure reflects how management currently operates and allocates resources. The Company's businesses are primarily segregated based on conventional power generation, renewable businesses which consist of solar and wind, and the thermal and chilled water business. The Corporate segment reflects the Company's corporate costs. The Company's chief operating decision maker, its Chief Executive Officer, evaluates the performance of its segments based on operational measures including adjusted earnings before interest, taxes, depreciation and amortization, or Adjusted EBITDA, and CAFD, as well as economic gross margin and net income (loss).

 	Three months ended June 30, 2016 (a)	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	85	
 	 	$	159	
 	 	$	39	
 	 	$	—	
 	 	$	283	
 	
Cost of operations	16	
 	 	34	
 	 	27	
 	 	—	
 	 	77	
 	
Depreciation and amortization	20	
 	 	50	
 	 	5	
 	 	—	
 	 	75	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	3	
 	 	3	
 	
Operating income (loss)	49	
 	 	75	
 	 	7	
 	 	(3	)	 	128	
 	
Equity in earnings of unconsolidated affiliates	4	
 	 	9	
 	 	—	
 	 	—	
 	 	13	
 	
Other income, net	—	
 	 	2	
 	 	—	
 	 	—	
 	 	2	
 	
Interest expense	(12	)	 	(36	)	 	(1	)	 	(19	)	 	(68	)	
Income (loss) before income taxes	41	
 	 	50	
 	 	6	
 	 	(22	)	 	75	
 	
Income tax expense	—	
 	 	—	
 	 	—	
 	 	12	
 	 	12	
 	
Net Income (Loss)	$	41	
 	 	$	50	
 	 	$	6	
 	 	$	(34	)	 	$	63	
 	
Total Assets	$	2,037	
 	 	$	5,862	
 	 	$	423	
 	 	$	186	
 	 	$	8,508	

 	

(a)  Retrospectively adjusted as discussed in Note 1, Nature of Business.

 	Three months ended June 30, 2015 (a)	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	85	
 	 	$	132	
 	 	$	42	
 	 	$	—	
 	 	$	259	
 	
Cost of operations	15	
 	 	32	
 	 	31	
 	 	—	
 	 	78	
 	
Depreciation and amortization	21	
 	 	53	
 	 	4	
 	 	—	
 	 	78	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	3	
 	 	3	
 	
Acquisition-related transaction and integration costs	—	
 	 	—	
 	 	—	
 	 	1	
 	 	1	
 	
Operating income (loss)	49	
 	 	47	
 	 	7	
 	 	(4	)	 	99	
 	
Equity in earnings of unconsolidated affiliates	4	
 	 	—	
 	 	—	
 	 	—	
 	 	4	
 	
Other income, net	—	
 	 	1	
 	 	—	
 	 	—	
 	 	1	
 	
Loss on debt extinguishment	(7	)	 	—	
 	 	—	
 	 	—	
 	 	(7	)	
Interest expense	(13	)	 	(23	)	 	(2	)	 	(13	)	 	(51	)	
Income (loss) before income taxes	33	
 	 	25	
 	 	5	
 	 	(17	)	 	46	
 	
Income tax expense	—	
 	 	—	
 	 	—	
 	 	4	
 	 	4	
 	
Net Income (Loss)	$	33	
 	
 	$	25	
 	
 	$	5	
 	
 	$	(21	)	
 	$	42	

 	

(a)Retrospectively adjusted as discussed in Note 1, Nature of Business.

20

                                            

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

 	Six months ended June 30, 2016 (a)	
(In millions)	Conventional Generation	
 	Renewables	
 	Thermal	
 	Corporate	
 	Total	
Operating revenues	$	164	
 	 	$	270	
 	 	$	83	
 	 	$	—	
 	
 	$	517	
 	
Cost of operations	39	
 	 	67	
 	 	56	
 	 	—	
 	
 	162	
 	
Depreciation and amortization	40	
 	 	99	
 	 	10	
 	 	—	
 	
 	149	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	6	
 	
 	6	
 	
Operating income (loss)	85	
 	 	104	
 	 	17	
 	 	(6	)	 	200	
 	
Equity in earnings of unconsolidated affiliates	7	
 	 	9	
 	 	—	

 	
 	16	
 	
Other income, net	—	
 	 	2	
 	 	—	
 	 	—	
 	 	2	
 	
Interest expense	(23	)	 	(78	)	 	(3	)	 	(38	)	
 	(142	)	
Income (loss) before income taxes	69	
 	 	37	
 	 	14	
 	 	(44	)	
 	76	
 	
Income tax expense	—	
 	 	—	
 	 	—	
 	 	12	
 	
 	12	
 	
Net Income (Loss)	$	69	
 	
 	$	37	
 	
 	$	14	
 	
 	$	(56	)	
 	$	64	

 	

(a)  Retrospectively adjusted as discussed in Note 1, Nature of Business.

 	Six months ended June 30, 2015 (a)	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	161	
 	 	$	223	
 	 	$	89	
 	 	$	—	
 	 	$	473	
 	
Cost of operations	36	
 	 	63	
 	 	65	
 	 	—	
 	 	164	
 	
Depreciation and amortization	42	
 	 	102	
 	 	9	
 	 	—	
 	 	153	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	6	
 	 	6	
 	
Acquisition-related transaction and integration costs	—	
 	 	—	
 	 	—	
 	 	1	
 	 	1	
 	
Operating income (loss)	83	
 	 	58	
 	 	15	
 	 	(7	)	 	149	
 	
Equity in earnings of unconsolidated affiliates	7	
 	 	—	
 	 	—	
 	 	—	
 	 	7	
 	
Other income, net	1	
 	 	1	
 	 	—	
 	 	—	
 	 	2	
 	
Loss on debt extinguishment	(7	)	 	—	
 	 	—	
 	 	—	
 	 	(7	)	
Interest expense	(25	)	 	(75	)	 	(4	)	 	(26	)	 	(130	)	
Income (loss) before income taxes	59	
 	 	(16	)	 	11	
 	 	(33	)	 	21	
 	
Net Income (Loss)	$	59	
 	
 	$	(16	)	
 	$	11	
 	
 	$	(33	)	
 	$	21	

 	

(a)  Retrospectively adjusted as discussed in Note 1, Nature of Business.
Note 10 — Income Taxes
Effective Tax Rate
The income tax provision consisted of the following:

 	Three months ended June 30,	 	Six months ended June 30,	
 	2016	 	2015	 	2016	 	2015	
 	(In millions, except percentages)	
Income before income taxes	$	75	
 	 	$	46	
 	 	$	76	
 	 	$	21	
 	
Income tax expense	12	
 	 	4	
 	 	12	
 	 	—	
 	
Effective income tax rate	16.0	%	 	8.7	%	 	15.8	%	 	—	%	
For the three and six months ended June 30, 2016, and 2015, the overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and production and investment tax credits generated from certain wind and solar assets, respectively.
For tax purposes, NRG Yield LLC is treated as a partnership; therefore, the Company and NRG each record their respective share of taxable income or loss.

21

                                            

Note 11 — Related Party Transactions
In addition to the transactions and relationships described elsewhere in these notes to the consolidated financial statements, NRG and certain subsidiaries of NRG provide services to the Company and its project entities. Amounts due to NRG subsidiaries are recorded as accounts payable - affiliate and amounts due to the Company from NRG or its subsidiaries are recorded as accounts receivable - affiliate in the Company's balance sheet.
Power Hedge Contracts by and between Renewables segment Entities and NRG
Certain NRG Wind TE Holdco entities, which are subsidiaries in the Renewables segment, entered into power hedge contracts with NRG Texas Power LLC and generated $12 million during the six months ended June 30, 2015. Effective October 2015, Elbow Creek, one of the NRG Wind TE Holdco entities, entered into a PPA with NRG Power Marketing LLC, or NRG Power Marketing, as further described below, and the hedge agreement between Elbow Creek and NRG Texas Power LLC was terminated.
Additionally, Alta X and Alta XI entered into a hedge agreement with NRG Power Marketing, as further described in Note 6,  Accounting for Derivative Instruments and Hedging Activities , to hedge the forecasted sale of power until the start of the PPAs on January 1, 2016.
Power Purchase Agreement by and between Elbow Creek and NRG
In October 2015, Elbow Creek, the Company's subsidiary in the Renewables segment, entered into a PPA with NRG Power Marketing for the sale of energy and environmental attributes with the effective date of November 1, 2015, and expiring on October 31, 2022. Elbow Creek generated $4 million of revenue during the six months ended June 30, 2016.
Operation and Maintenance (O&M) Services Agreements by and between Thermal Entities and NRG
Certain wholly-owned subsidiaries of the Company are party to a Plant O&M Services Agreement with NRG, pursuant to which NRG provides necessary and appropriate services to operate and maintain the subsidiaries' plant operations, businesses and thermal facilities. NRG is reimbursed for the provided services, as well as for all reasonable and related expenses and expenditures, and payments to third parties for services and materials rendered to or on behalf of the parties to the agreements. NRG is not entitled to any management fee or mark-up under the agreements. Total fees incurred under the agreements were $15 million for the six months ended June 30, 2016, and 2015. There was a balance of $27 million and $29 million due to NRG in accounts payable — affiliate as of June 30, 2016, and December 31, 2015, respectively. As of June 30, 2016, $7 million of the balance was recorded in the current liabilities of the consolidated balance sheet and $20 million was recorded in long term liabilities of the consolidated balance sheet. Subsequent to June 30, 2016, $4 million of the outstanding balance has been paid.
Power Purchase Agreement by and between NRG Energy Center Dover LLC and NRG
In February 2016, NRG Energy Center Dover LLC, or NRG Dover, a subsidiary of the Company, entered into a PPA with NRG Power Marketing for the sale of energy and environmental attributes with an effective date of February 1, 2016 and expiration date of December 31, 2018. NRG Dover generated $2 million of revenue during the six months ended June 30, 2016. The agreement in place is additive to the existing Power Sales and Services Agreement as described further below.
Power Sales and Services Agreement by and between NRG Energy Center Dover LLC and NRG
NRG Energy Center Dover LLC, or NRG Dover, a subsidiary of the Company, is party to a Power Sales and Services Agreement with NRG Power Marketing. The agreement is automatically renewed on a month-to-month basis unless terminated by either party upon at least 30 days written notice. Under the agreement, NRG Power Marketing has the exclusive right to (i) manage, market and sell power, (ii) procure fuel and fuel transportation for operation of the Dover generating facility, to include for purposes other than generating power, (iii) procure transmission services required for the sale of power, and (iv) procure and market emissions credits for operation of the Dover generating facility.
In addition, NRG Power Marketing has the exclusive right and obligation to direct the output from the generating facility, in accordance with and to meet the terms of any power sales contracts executed against the power generation of the Dover facility. Under the agreement, NRG Power Marketing pays NRG Dover gross receipts generated through sales, less costs incurred by NRG Power Marketing related to providing such services as transmission and delivery costs, as well as fuel costs. In July 2013, the coal-fueled plant was converted to a natural gas facility. For the six months ended June 30, 2016, and 2015, NRG Dover purchased $1 million and $3 million, respectively, of natural gas from NRG Power Marketing.

22

                                            

Energy Marketing Services Agreement by and between NRG Energy Center Minneapolis LLC and NRG
NRG Energy Center Minneapolis LLC, or NRG Minneapolis, a subsidiary of the Company is party to an Energy Marketing Services Agreement with NRG Power Marketing, a wholly-owned subsidiary of NRG. Under the agreement, NRG Power Marketing procures fuel and fuel transportation for the operation of the Minneapolis generating facility. For the six months ended June 30, 2016, and 2015, NRG Minneapolis purchased $4 million and $5 million, respectively, of natural gas from NRG Power Marketing.
O&MServices Agreements by and between GenConn and NRG
GenConn incurs fees under two O&M services agreements with wholly-owned subsidiaries of NRG. The fees incurred under the agreements were $3 million and $2 million for the six months ended June 30, 2016, and 2015, respectively.
O&MServices Agreement by and between El Segundo and NRG
El Segundo incurs fees under an O&M services agreement with NRG El Segundo Operations, Inc., a wholly-owned subsidiary of NRG. Under the O&M services agreement, NRG El Segundo Operations, Inc. manages, operates and maintains the El Segundo facility for an initial term of ten years following the commercial operations date. For the six months ended June 30, 2016, and 2015, the costs incurred under the agreement were $2 million. There was a balance of $1 million due to NRG El Segundo in accounts payable — affiliate as of June 30, 2016, and December 31, 2015.
Administrative Services Agreement by and between Marsh Landing and NRG
Marsh Landing is a party to an administrative services agreement with GenOn Energy Services, LLC, a wholly-owned subsidiary of NRG, which provides invoice processing and payment on behalf of Marsh Landing. Marsh Landing reimburses GenOn Energy Services, LLC for the amounts paid by it. The Company reimbursed costs under this agreement of $5 million and $9 million for the six months ended June 30, 2016, and 2015, respectively. There was a balance of $6 million due to GenOn Energy Services, LLC in accounts payable — affiliate as of June 30, 2016, and December 31, 2015.
Administrative Services Agreement by and between CVSR and NRG
CVSR is a party to an administrative services agreement with NRG Renew Operation & Maintenance LLC, a wholly-owned subsidiary of NRG, which provides O&M services on behalf of CVSR. CVSR reimburses NRG Energy Services LLC for the amounts paid by it. CVSR reimbursed costs under this agreement of $2 million and $3 million for the six months ended June 30, 2016, and 2015, respectively.
Management Services Agreement by and between the Company and NRG
NRG provides the Company with various operation, management, and administrative services, which include human resources, accounting, tax, legal, information systems, treasury, and risk management, as set forth in the Management Services Agreement. As of June 30, 2016, the base management fee was approximately $7 million per year, subject to an inflation-based adjustment annually at an inflation factor based on the year-over-year U.S. consumer price index. The fee is also subject to adjustments following the consummation of future acquisitions and as a result of a change in the scope of services provided under the Management Services Agreement. During the year ended December 31, 2015, the fee was increased by $1 million per year primarily due to the acquisitions of the January 2015 Drop Down Assets and the November 2015 Drop Down Assets. Costs incurred under this agreement were $5 million for the six months ended June 30, 2016, and 2015, which included certain direct expenses incurred by NRG on behalf of the Company in addition to the base management fee. There was a balance of $4 million due to NRG in accounts payable — affiliate as of June 30, 2016. Subsequent to June 30, 2016, the balance has been paid in full.
Administrative Services Agreements by and between NRG Wind TE Holdco and NRG
Certain subsidiaries of NRG have entered into agreements with the Company's project entities to provide operation and maintenance services for the balance of the plants not covered by turbine supplier's maintenance and service agreements for the post-warranty period. The agreements have various terms with provisions for extension until terminated. For the six months ended June 30, 2016, and 2015, the costs incurred under the agreements were $3 million and $2 million, respectively.
Certain subsidiaries of NRG provide support services to the NRG Wind TE Holdco project entities pursuant to various support services agreements. The agreements provide for administrative and support services and reimbursements of certain insurance, consultant, and credit costs. For the six months ended June 30, 2016, and 2015, the costs incurred under the agreements were $1 million and $2 million, respectively.

23

                                            

Note 12— Contingencies
The Company's material legal proceeding is described below. The Company believes that it has a valid defense to this legal proceeding and intends to defend it vigorously. The Company records reserves for estimated losses from contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. In addition, legal costs are expensed as incurred. Management assesses such matters based on current information and makes a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought, and the probability of success. The Company is unable to predict the outcome of the legal proceeding below or reasonably estimate the scope or amount of any associated costs and potential liabilities. As additional information becomes available, management adjusts its assessment and estimates of such contingencies accordingly. Because litigation is subject to inherent uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of the Company's liabilities and contingencies could be at amounts that are different from its currently recorded reserves and that such difference could be material.
In addition to the legal proceeding noted below, the Company and its subsidiaries are party to other litigation or legal proceedings arising in the ordinary course of business. In management's opinion, the disposition of these ordinary course matters will not materially adversely affect the Company's consolidated financial position, results of operations, or cash flows.
Braun v. NRG Yield, Inc. — On April 19, 2016, plaintiffs filed a purported class action lawsuit against NRG Yield, Inc. and against each current and former member of its board of directors individually in California Superior Court in Kern County, CA. Plaintiffs allege various violations of the Securities Act due to the defendants’ alleged failure to disclose material facts related to low wind production prior to the Company's June 22, 2015 Class C common stock offering. Plaintiffs seek compensatory damages, rescission, attorney’s fees and costs.  On August 3, 2016, the court approved a stipulation entered into by the parties. The stipulation provided that the plaintiffs would file an amended complaint by August 19, 2016, which they did on August 18, 2016. The Defendants need to file a responsive pleading by October 18, 2016.

24

Exhibit 99.10
ITEM 2 — Management's Discussion and Analysis of Financial Condition and the Results of Operations
The following discussion analyzes the Company's historical financial condition and results of operations, which were recast to include the effect of the CVSR Drop Down and the November 2015 Drop Down Assets, which were acquired from NRG on September 1, 2016 and November 3, 2015, respectively. As further discussed in Note 1,  Nature of Business , to the Consolidated Financial Statements, the purchase of these assets was accounted for in accordance with ASC 805-50 , Business Combinations - Related Issues , pursuant to which the assets and liabilities transferred to the Company relate to interests under common control by NRG and, accordingly, were recorded at historical cost. The difference between the cash proceeds and historical value of the net assets was recorded as a distribution from NRG with the offset to noncontrolling interest. The guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control.
As you read this discussion and analysis, you should refer to the Company's Consolidated Statements of Operations to this Form 8-K, which present the results of operations for the six months ended June 30, 2016, and 2015. You should also refer to the Company's 2015 Form 10-K, which includes detailed discussions of various items impacting the Company's business, results of operations and financial condition.
The discussion and analysis below has been organized as follows:
 	 	
•	Executive Summary, including a description of the business and significant events that are important to understanding the results of operations and financial condition;	
 	 	
•	Results of operations, including an explanation of significant differences between the periods in the specific line items of the consolidated statements of income;	
 	 	
•	Financial condition addressing liquidity position, sources and uses of cash, capital resources and requirements, commitments, and off-balance sheet arrangements;	
 	 	
•	Known trends that may affect the Company’s results of operations and financial condition in the future; and	
 	 	
•	Critical accounting policies which are most important to both the portrayal of the Company's financial condition and results of operations, and which require management's most difficult, subjective or complex judgment.	

1

Executive Summary
Introduction and Overview
The Company is a dividend growth-oriented company formed to serve as the primary vehicle through which NRG owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. The Company believes it is well positioned to be a premier company for investors seeking stable and growing dividend income from a diversified portfolio of lower-risk high-quality assets.
The Company owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the U.S. The Company’s contracted generation portfolio collectively represents  4,563 net MW.  Each of these assets sells substantially all of its output pursuant to long-term offtake agreements with creditworthy counterparties. The average remaining contract duration of these offtake agreements was approximately  17 years as of June 30, 2016,  based on CAFD . The Company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,315 net MWt and electric generation capacity of 123 net MW. These thermal infrastructure assets provide steam, hot water and/or chilled water, and in some instances electricity, to commercial businesses, universities, hospitals and governmental units in multiple locations, principally through long-term contracts or pursuant to rates regulated by state utility commissions.
Regulatory Matters
The Company’s regulatory matters are described in the Company’s 2015 Form 10-K in Item 1, Business —  Regulatory Matters  and Item 1A,  Risk Factors.
As owners of power plants and participants in wholesale and thermal energy markets, certain of the Company's subsidiaries are subject to regulation by various federal and state government agencies. These include FERC and the PUCT, as well as other public utility commissions in certain states where the Company's assets are located. Each of the Company's U.S. generating facilities qualifies as a EWG or QF. In addition, the Company is subject to the market rules, procedures and protocols of the various ISO and RTO markets in which it participates. Likewise, the Company must also comply with the mandatory reliability requirements imposed by NERC and the regional reliability entities in the regions where the Company operates.
The Company's operations within the ERCOT footprint are not subject to rate regulation by FERC, as they are deemed to operate solely within the ERCOT market and not in interstate commerce. These operations are subject to regulation by the PUCT.
Environmental Matters
The Company’s environmental matters are described in the Company’s 2015 Form 10-K in Item 1, Business —  Environmental Matters  and Item 1A,  Risk Factors.
The Company is subject to a wide range of environmental laws in the development, construction, ownership and operation of projects. These laws generally require that governmental permits and approvals be obtained before construction and during operation of facilities. The Company is also subject to laws and regulations surrounding the protection of wildlife, including migratory birds, eagles and threatened and endangered species. Environmental laws have become increasingly stringent and the Company expects this trend to continue.
Trends Affecting Results of Operations and Future Business Performance
Wind and Solar Resource Availability

The availability of the wind and solar resources affects the financial performance of the wind and solar facilities, which may impact the Company’s overall financial performance.  Due to the variable nature of the wind and solar resources, the Company cannot predict the availability of the wind and solar resources and the potential variances from expected performance levels from quarter to quarter.  To the extent the wind and solar resources are not available at expected levels, it could have a negative impact on the Company’s financial performance for such periods.
CapitalMarket Conditions
The Company believes that its inability to access the capital markets has largely subsided and has continued to improve through the second quarter and into the third quarter of 2016.  The Company’s growth strategy depends on its ability to identify and acquire additional conventional and renewable facilities from NRG and unaffiliated third parties, which will require access to debt or equity financing to complete such acquisitions or replenish capital for future acquisitions. 

2

Consolidated Results of Operations
The following table provides selected financial information:

 	Three months ended June 30,	 	Six months ended June 30,	
(In millions, except otherwise noted)	2016	 	2015	 	Change %	 	2016	 	2015	 	Change %	
Operating Revenues	 	 	 	 	 	 	 	 	 	 	 	
Energy and capacity revenues	$	300	
 	 	$	278	
 	 	8	
 	 	$	551	
 	 	$	496	
 	 	11	
 	
Contract amortization	(17	)	 	(15	)	 	13	
 	 	(34	)	 	(26	)	 	31	
 	
Mark-to-market economic hedging activities	—	
 	 	(4	)	 	100	
 	 	—	
 	 	3	
 	 	(100	)	
Total operating revenues	283	
 	 	259	
 	 	9	
 	 	517	
 	 	473	
 	 	9	
 	
Operating Costs and Expenses	 	 	 	 	 	 	 	 	 	 	 	
Cost of fuels	14	
 	 	16	
 	 	(13	)	 	30	
 	 	38	
 	 	(21	)	
Emissions credit amortization	—	
 	 	—	
 	 	—	
 	 	6	
 	 	—	
 	 	100	
 	
Operations and maintenance	49	
 	 	44	
 	 	11	
 	 	93	
 	 	91	
 	 	2	
 	
Other costs of operations	14	
 	 	18	
 	 	(22	)	 	33	
 	 	35	
 	 	(6	)	
Depreciation and amortization	75	
 	 	78	
 	 	(4	)	 	149	
 	 	153	
 	 	(3	)	
General and administrative	3	
 	 	3	
 	 	—	
 	 	6	
 	 	6	
 	 	—	
 	
Acquisition-related transaction and integration costs	—	
 	 	1	
 	 	(100	)	 	—	
 	 	1	
 	 	(100	)	
Total operating costs and expenses	155	
 	 	160	
 	 	(3	)	 	317	
 	 	324	
 	 	(2	)	
Operating Income	128	
 	 	99	
 	 	29	
 	 	200	
 	 	149	
 	 	34	
 	
Other Income (Expense)	 	 	 	 	 	 	 	 	 	 	
 	
Equity in earnings of unconsolidated affiliates	13	
 	 	4	
 	 	225	
 	 	16	
 	 	7	
 	 	129	
 	
Other income, net	2	
 	 	1	
 	 	100	
 	 	2	
 	 	2	
 	 	—	
 	
Loss on debt extinguishment	—	
 	 	(7	)	 	(100	)	 	—	
 	 	(7	)	 	100	
 	
Interest expense	(68	)	 	(51	)	 	33	
 	 	(142	)	 	(130	)	 	9	
 	
Total other expense, net	(53	)	 	(53	)	 	—	
 	 	(124	)	 	(128	)	 	(3	)	
Income Before Income Taxes	75	
 	 	46	
 	 	63	
 	 	76	
 	 	21	
 	 	262	
 	
Income tax expense	12	
 	 	4	
 	 	200	
 	 	12	
 	 	—	
 	 	100	
 	
Net Income	63	
 	 	42	
 	 	50	
 	 	64	
 	 	21	
 	 	205	
 	
Less: Pre-acquisition net income (loss) of Drop Down Assets	5	
 	 	1	
 	 	400	
 	 	4	
 	 	(4	)	 	(200	)	
Net Income Excluding Pre-acquisition Net Income (Loss) of Drop Down Assets	58	
 	 	41	
 	 	41	
 	 	60	
 	 	25	
 	 	(140	)	
Less: Net income attributable to noncontrolling interests	26	
 	 	31	
 	 	(16	)	 	23	
 	 	20	
 	 	(15	)	
Net Income Attributable to NRG Yield, Inc.	$	32	
 	 	$	10	
 	 	220	
 	 	$	37	
 	 	$	5	
 	 	NM	

 	

NM - Not meaningful

 	Three months ended June 30,	 	Six months ended June 30,	
Business metrics:	2016	 	2015	 	2016	 	2015	
Renewables MWh generated/sold (in thousands) (a)	2,041	
 	 	1,911	
 	 	3,819	
 	 	3,217	
 	
Conventional MWh generated (in thousands) (b)	376	
 	 	541	
 	 	637	
 	 	861	
 	
Thermal MWt sold (in thousands)	448	
 	 	434	
 	 	1,001	
 	 	1,051	
 	
Thermal MWh sold (in thousands) (c)	9	
 	 	83	
 	 	49	
 	 	127	

 	

(a)  Volumes sold do not include the MWh generated by the Company's equity method investments.
(b) Volumes generated are not sold as the Conventional facilities sell capacity rather than energy.
(c) MWh sold do not include 23 MWh and 74 MWh generated by NRG Dover, a subsidiary of the Company, under the PPA with NRG Power Marketing during the three and six months ended June 30, 2016, respectively, as further described in Note 11,  Related Party Transactions .    

3

Management’s Discussion of the Results of Operations for the Three Months ended June 30, 2016, and 2015
Gross Margin and Economic Gross Margin
In addition to gross margin, the Company evaluates its operating performance using the measure of economic gross margin, which is not a GAAP measure and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.  Economic gross margin should be viewed as a supplement to and not a substitute for the Company' presentation of gross margin, which is the most directly comparable GAAP measure.  Economic gross margin is not intended to represent gross margin. The Company believes that economic gross margin is useful to investors as it is a key operational measure reviewed by the Company's chief operating decision maker. Economic gross margin is defined as energy and capacity revenue less cost of fuels. Economic gross margin excludes the following components from GAAP gross margin: contract amortization, mark-to-market results, emissions credit amortization and (losses) gains on economic hedging activities. Mark-to-market results consist of unrealized gains and losses on contracts that are not yet settled.
The below tables present the composition of gross margin, as well as the reconciliation to economic gross margin, for the three months ended June 30, 2016, and 2015:

 	Conventional Generation	 	Renewables	 	Thermal	 	Total	
 (In millions)	 	 	 	 	 	 	 	
Three months ended June 30, 2016	 	 	 	 	 	 	
 	
Energy and capacity revenues	$	87	
 	 	$	174	
 	 	$	39	
 	 	$	300	
 	
Cost of fuels	(1	)	 	—	
 	 	(13	)	 	(14	)	
Contract amortization	(2	)	 	(15	)	 	—	
 	 	(17	)	
Gross margin	84	
 	 	159	
 	 	26	
 	 	269	
 	
Contract amortization	2	
 	 	15	
 	 	—	
 	 	17	
 	
Economic gross margin	$	86	
 	 	$	174	
 	 	$	26	
 	 	$	286	

Three months ended June 30, 2015	 	 	 	 	 	 	
 	
Energy and capacity revenues	$	86	
 	 	$	150	
 	 	$	42	
 	 	$	278	
 	
Cost of fuels	—	
 	 	—	
 	 	(16	)	 	(16	)	
Contract amortization	(1	)	 	(14	)	 	—	
 	 	(15	)	
Mark-to-market for economic hedging activities	—	
 	 	(4	)	 	—	
 	 	(4	)	
Gross margin	85	
 	 	132	
 	 	26	
 	 	243	
 	
Contract amortization	1	
 	 	14	
 	 	—	
 	 	15	
 	
Mark-to-market for economic hedging activities	—	
 	 	4	
 	 	—	
 	 	4	
 	
Economic gross margin	$	86	
 	 	$	150	
 	 	$	26	
 	 	$	262	
 	
Gross margin increased by $26 million and economic gross marginincreased by $24 million during the three months ended June 30, 2016, compared to the same period in 2015, primarily due to:    

(In millions)	 	
Increase in Renewables economic gross margin due to higher wind generation primarily at Alta, as well as the acquisition of Spring Canyon	$	15	
 	
Increase in Renewables economic gross margin due to higher pricing in the Alta X and XI PPAs, which began in January 2016, compared with merchant prices in 2015	9	
 	
Increase in economic gross margin	24	
 	
Higher contract amortization primarily for the Alta X and XI PPAs, which began in January 2016	(2	)	
Increase due to unrealized losses on forward contracts with an NRG subsidiary hedging the forecasted sale of power from Elbow Creek, Alta X and Alta XI in 2015, prior to the start of the PPAs	4	
 	
Increase in gross margin	$	26	
 	
Operations and Maintenance Expense
Operations and maintenance expense increased by $5 million during the three months ended June 30, 2016, compared to the same period in 2015, primarily due to component disposals and inventory adjustments for certain wind projects and the acquisition of Spring Canyon in 2015, partially offset by the extended forced outage at El Segundo in 2015. 

4

Other Costs of Operations
Other costs of operations decreased by $4 million during the three months ended June 30, 2016, compared to the same period in 2015, primarily due to a property tax rebate received in 2016 for the Alta projects. 

 	 	

 	
 	
Equity in Earnings of Unconsolidated Affiliates
Equity in earnings of unconsolidated affiliates increased by $9 million during the three months ended June 30, 2016, compared to the same period in 2015, due primarily to the acquisition of Desert Sunlight, which was acquired on June 29, 2015, as well as increased equity in earnings from DGPV Holdco and RPV Holdco. 
Interest Expense     
Interest expense increased by $17 million during the three months ended June 30, 2016, compared to the same period in 2015, due primarily to:

(In millions)	 	
Increase from changes in the fair value of Alpine interest rate swaps	$	7	
 	
Increase for Alta due to change in value of Alta X and XI interest rate swaps, partially offset by a decrease in interest expense for the redemption of Alta X and XI project-level debt	5	
 	
Increase due to the 2020 Convertible Notes issued in June 2015, amortization of the related discount on the notes and debt issuance costs	4	
 	
Increase due to higher revolving credit facility borrowings in 2016	1	
 	
 	$	17	
 	
Income Tax Expense
For the three months ended June 30, 2016, the Company recorded income tax expense of $12 million on pretax income of $75 million. For the same period in 2015, the Company recorded income tax expense of $4 million on pretax income of $46 million. For the three months ended June 30, 2016 and 2015, the Company's overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and production and investment tax credits generated from certain wind and solar assets, respectively.
Income Attributable to Noncontrolling Interests
For the three months ended June 30, 2016, the Company had income of $42 million attributable to NRG's interest in the Company and a loss of $16 million attributable to non-controlling interests with respect to its tax equity financing arrangements and the application of the HLBV method. For the three months ended June 30, 2015, the Company had income of $24 million attributable to NRG's interest in the Company and income of $7 million attributable to non-controlling interests with respect to its tax equity financing arrangements and the application of the HLBV method.

Management’s Discussion of the Results of Operations for the Six Months ended June 30, 2016, and 2015 
Gross Margin and Economic Gross Margin
In addition to gross margin, the Company evaluates its operating performance using the measure of economic gross margin, which is not a GAAP measure and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.  Economic gross margin should be viewed as a supplement to and not a substitute for the Company' presentation of gross margin, which is the most directly comparable GAAP measure.  Economic gross margin is not intended to represent gross margin. The Company believes that economic gross margin is useful to investors as it is a key operational measure reviewed by the Company's chief operating decision maker. Economic gross margin is defined as energy and capacity revenue less cost of fuels. Economic gross margin excludes the following components from GAAP gross margin: contract amortization, mark-to-market results, emissions credit amortization and (losses) gains on economic hedging activities. Mark-to-market results consist of unrealized gains and losses on contracts that are not yet settled.
The below tables present the composition of gross margin, as well as the reconciliation to economic gross margin, for the six months ended June 30, 2016, and 2015:

5

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Conventional Generation	 	Renewables	 	Thermal	 	Total	
(In millions)	 	 	 	 	 	 	 	
Six months ended June 30, 2016	 	 	 	 	 	 	 	
Energy and capacity revenues	$	167	
 	 	$	300	
 	 	$	84	
 	 	$	551	
 	
Cost of fuels	(1	)	 	—	
 	 	(29	)	 	(30	)	
Contract amortization	(3	)	 	(30	)	 	(1	)	 	(34	)	
Emissions credit amortization	(6	)	 	—	
 	 	—	
 	 	(6	)	
Gross margin	157	
 	 	270	
 	 	54	
 	 	481	
 	
Contract amortization	3	
 	 	30	
 	 	1	
 	 	34	
 	
Emissions credit amortization	6	
 	 	—	
 	 	—	
 	 	6	
 	
Economic gross margin	$	166	
 	 	$	300	
 	 	$	55	
 	 	$	521	

Six months ended June 30, 2015	 	 	 	 	 	 	 	
Energy and capacity revenues	$	163	
 	 	$	243	
 	 	$	90	
 	 	$	496	
 	
Cost of fuels	(1	)	 	—	
 	 	(37	)	 	(38	)	
Contract amortization	(2	)	 	(23	)	 	(1	)	 	(26	)	
Mark-to-market for economic hedging activities	—	
 	 	3	
 	 	—	
 	 	3	
 	
Gross margin	160	
 	 	223	
 	 	52	
 	 	435	
 	
Contract amortization	2	
 	 	23	
 	 	1	
 	 	26	
 	
Mark-to-market for economic hedging activities	—	
 	 	(3	)	 	—	
 	 	(3	)	
Economic gross margin	$	162	
 	 	$	243	
 	 	$	53	
 	 	$	458	

6

Gross margin increased by $46 million and economic gross margin increased by $63 million during the six months ended June 30, 2016, compared to the same period in 2015 due to:

(In millions)	 	
Increase in Renewables economic gross margin due mainly to higher wind generation, primarily for the Alta projects, as well as the acquisition of Spring Canyon	$	41	
 	
Increase in Renewables economic gross margin due to higher pricing in the Alta X and XI PPAs which began in January 2016, compared with merchant prices in 2015	16	
 	
Increase in Conventional Generation economic gross margin primarily due to higher revenues at El Segundo in 2016 as a result of a return to service after an extended forced outage in 2015	4	
 	
Increase in Thermal economic gross margin primarily due to lower gas prices, partially offset by a decrease in generation due to milder weather conditions	2	
 	
Increase in economic gross margin	63	
 	
Higher contract amortization primarily for the Alta X and XI PPAs, which began in January 2016	(8	)	
Emissions credit amortization of NOx allowances at Walnut Creek and El Segundo in compliance with amendments to the Regional Clean Air Incentives Market program	(6	)	
Decrease due to unrealized gains on forward contracts with an NRG subsidiary hedging the forecasted sale of power from Elbow Creek, Alta X and Alta XI in 2015, prior to the start of the PPAs	(3	)	
Increase in gross margin	$	46	
 	
Operations and Maintenance Expense
Operations and maintenance expense increased by $2 million during the six months ended June 30, 2016, compared to the same period in 2015, due to:

Increase in Renewables operations and maintenance expense primarily due to component disposals and inventory adjustments for certain wind projects, higher wind generation in the current year, and the acquisition of Spring Canyon in 2015	$	7	
 	
Decrease in the Conventional operations and maintenance expense primarily due to extended forced outage at El Segundo in 2015	(4	)	
Decrease in Thermal operations and maintenance expense due to lower generation due to milder weather conditions	(1	)	
 	$	2	
 	
Other Costs of Operations
Other costs of operations decreased by $2 million during the six months ended June 30, 2016, compared to the same period in 2015, primarily due to a property tax rebate received in 2016 for the Alta projects. 

 	
Equity in Earnings of Unconsolidated Affiliates
Equity in earnings of unconsolidated affiliates increased by $9 million during the six months ended June 30, 2016, compared to the same period in 2015, due primarily to the acquisition of Desert Sunlight, which was acquired on June 29, 2015, as well as increased equity in earnings from DGPV Holdco, RPV Holdco and San Juan Mesa, partially offset by losses from Elkhorn Ridge. 

7

Interest Expense     
Interest expense increased by $12 million during the six months ended June 30, 2016, compared to the same period in 2015, due to:

(In millions)	 	
Increase from changes in the fair value of Alpine interest rate swaps	$	9	
 	
Increase due to issuance of the 2020 Convertible Notes in the second quarter of 2015, amortization of the related discount on the notes and debt issuance costs	8	
 	
Increase due to higher revolving credit facility borrowings in 2016	3	
 	
Decrease from repricing of project-level financing arrangements and principal repayments in the Conventional segment	(1	)	
Decrease for redemption of Alta X and XI project-level debt	(7	)	
 	$	12	
 	
Income Tax Expense
For the six months ended June 30, 2016, the Company recorded income tax expense of $12 million on pretax income of $76 million. For the same period in 2015, the Company did not record any income tax expense on pretax income of $21 million. For the six months ended June 30, 2016 and 2015, the overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and production and investment tax credits generated from certain wind and solar assets, respectively.
Income Attributable to Noncontrolling Interests
For the six months ended June 30, 2016, the Company had income of $52 million attributable to NRG related to its 46.7% economic interest in NRG Yield LLC and its 25% interest in NRG Wind TE Holdco. Additionally, for the six months ended June 30, 2016, the Company had a loss of $29 million attributable to non-controlling interests with respect to its tax equity financing arrangements and the application of the HLBV method. For the six months ended June 30, 2015, the Company had income of $13 million attributable to NRG's 55.3% economic interest in the Company and income of $7 million attributable to non-controlling interests with respect to its tax equity financing arrangements and application of the HLBV method.

Liquidity and Capital Resources
The Company's principal liquidity requirements are to meet its financial commitments, finance current operations, fund capital expenditures, including acquisitions from time to time, to service debt and to pay dividends. Historically, the Company's predecessor operations were financed as part of NRG's integrated operations and largely relied on internally generated cash flows as well as corporate and/or project-level borrowings to satisfy its capital expenditure requirements.  As a normal part of the Company's business, depending on market conditions, the Company will from time to time consider opportunities to repay, redeem, repurchase or refinance its indebtedness. Changes in the Company's operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause the Company to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions.
Liquidity Position
As of June 30, 2016, and December 31, 2015, the Company's liquidity was approximately $322 million and $375 million, respectively, comprised of cash, restricted cash, and availability under the Company's revolving credit facility. The Company's liquidity includes $123 million and $131 million of restricted cash balances as of  June 30, 2016 , and  December 31, 2015 , respectively. Restricted cash consists primarily of funds to satisfy the requirements of certain debt agreements and funds held within the Company's projects that are restricted in their use. The Company's various financing arrangements are described in  Note 7 ,  Long-term Debt.   As of  June 30, 2016 , the Company had $110 million of available borrowings under its revolving credit facility.

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Management believes that the Company's liquidity position, cash flows from operations and availability under its revolving credit facility will be adequate to meet the Company's financial commitments; debt service obligations; growth, operating and maintenance capital expenditures; and to fund dividends to holders of the Company's Class A common stock and Class C common stock. Management continues to regularly monitor the Company's ability to finance the needs of its operating, financing and investing activity within the dictates of prudent balance sheet management.
Credit Ratings
Credit rating agencies rate a firm's public debt securities. These ratings are utilized by the debt markets in evaluating a firm's credit risk. Ratings influence the price paid to issue new debt securities by indicating to the market the Company's ability to pay principal, interest and preferred dividends. Rating agencies evaluate a firm's industry, cash flow, leverage, liquidity, and hedge profile, among other factors, in their credit analysis of a firm's credit risk.
The following table summarizes the credit ratings for the Company and its Senior Notes as of June 30, 2016:

 	S&P	 	Moody's	
NRG Yield, Inc. 	BB+	 	Ba2	
5.375% Senior Notes, due 2024	BB+	 	Ba2	
On August 15, 2016, S&P lowered its corporate credit rating on NRG Yield, Inc and the Senior Notes due 2024 to BB from BB+. The rating outlook is stable.

Sources of Liquidity
The Company's principal sources of liquidity include cash on hand, cash generated from operations, borrowings under new and existing financing arrangements and the issuance of additional equity and debt securities as appropriate given market conditions. As described in  Note 7 ,  Long-term Debt , to this Form 10-Q and Note 9,  Long-term Debt , to the audited consolidated financial statements included in the Company's 2015 Form 10-K, the Company's financing arrangements consist of the revolving credit facility, the 2019 Convertible Notes, the 2020 Convertible Notes, the Senior Notes and project-level financings for its various assets.
CVSR Holdco Financing Arrangement
On July 15, 2016, CVSR Holdco, the indirect owner of the CVSR project, issued $200 million of senior secured notes that bear interest at 4.68% and mature on March 31, 2037.  Net proceeds of  $97.5 million  were distributed to NRG Yield Operating LLC based on its pro-rata ownership as of July 15, 2016.  The proceeds were utilized, along with  $28 million  of cash on hand, to reduce borrowings under the Company’s revolving credit facility. As of July 31, 2016, $193 million of borrowings were outstanding.

Uses of Liquidity
The Company's requirements for liquidity and capital resources, other than for operating its facilities, are categorized as: (i) debt service obligations, as described more fully in  Note 7 ,  Long-term Debt ; (ii) capital expenditures; (iii) acquisitions and investments; and (iv) cash dividends to investors.

Capital Expenditures
The Company's capital spending program is mainly focused on maintenance capital expenditures, or costs to maintain the assets currently operating, such as costs to replace or refurbish assets during routine maintenance, and growth capital expenditures or construction of new assets and completing the construction of assets where construction is in process. The Company develops annual capital spending plans based on projected requirements for maintenance and growth capital. For the six months ended June 30, 2016 , the Company used approximately $11 million to fund capital expenditures, of which $9 million related to maintenance capital expenditures. For the six months ended  June 30,  2015, the Company used approximately $9 million to fund capital expenditures, of which $6 million related to maintenance capital expenditures.

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Acquisitions and Investments
The Company intends to acquire generation assets developed and constructed by NRG in the future, as well as generation and thermal infrastructure assets from third parties where the Company believes its knowledge of the market and operating expertise provides a competitive advantage, and to utilize such acquisitions as a means to grow its CAFD. 
CVSR— On September 1, 2016, the Company acquired the remaining 51.05% interest of CVSR Holdco LLC, which indirectly owns the CVSR solar facility, CVSR Holdco LLC, which indirectly owns the CVSR solar facility, for total cash consideration of $78.5 million, subject to working capital adjustments and plus assumed non-recourse debt. The acquisition was funded with cash on hand.

Cash Dividends to Investors
NRG Yield, Inc. intends to use the amount of cash that it receives from its distributions from NRG Yield LLC to pay quarterly dividends to the holders of its Class A common stock and Class C common stock. NRG Yield LLC intends to distribute to its unit holders in the form of a quarterly distribution all of the CAFD it generates each quarter, less reserves for the prudent conduct of the business, including among others, maintenance capital expenditures to maintain the operating capacity of the assets. CAFD is defined as net income before interest expense, income taxes, depreciation and amortization; plus cash distributions from unconsolidated affiliates; less cash distributions to noncontrolling interests, maintenance capital expenditures, pro-rata EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness and changes in other assets. Dividends on t he Class A common stock and Class C common stock are subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations. The Company expects that, based on current circumstances, comparable cash dividends will continue to be paid in the foreseeable future.
The following table lists the dividends paid on NRG Yield, Inc.'s Class A common stock and Class C common stock during the six months ended June 30, 2016:

 	Second Quarter 2016	 	First Quarter 2016	
Dividends per Class A share	$	0.23	
 	 	$	0.225	
 	
Dividends per Class C share	$	0.23	
 	 	$	0.225	
 	
On July 26, 2016, NRG Yield, Inc. declared quarterly dividends on its Class A common stock and Class C common stock of $0.24 per share payable on September 15, 2016, to stockholders of record as of September 1, 2016.

Cash Flow Discussion
The following table reflects the changes in cash flows for the six months ended June 30, 2016, compared to 2015:

 	Six months ended June 30,	 	 	
 	2016	 	2015	 	Change	
 	(In millions)	
Net cash provided by operating activities	$	215	
 	 	$	98	
 	 	$	117	
 	
Net cash used in investing activities	(34	)	 	(820	)	 	$	786	
 	
Net cash (used in) provided by financing activities	(203	)	 	600	
 	 	$	(803	)	
Net Cash Provided By Operating Activities

Changes to net cash provided by operating activities were driven by:	(In millions)	
Increase in operating income adjusted for non-cash items	$	91	
 	
Changes in working capital driven primarily by the timing of wind generation in 2015 compared to 2016	25	
 	
Higher distributions from unconsolidated affiliates	1	
 	
 	$	117	

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Net Cash Used In Investing Activities

Changes to net cash used in investing activities were driven by:	(In millions)	
Payments made to acquire the January 2015 Drop Down Assets	$	489	
 	
Decrease in investments in unconsolidated affiliates in 2016 primarily due to the investment in Desert Sunlight made in 2015	272	
 	
Payments to acquire businesses in 2015, net of cash acquired	37	
 	
Changes in restricted cash due to higher funding for certain projects' debt reserves partially offset by higher project distributions in 2016 compared to 2015	(13	)	
Other	1	
 	
 	$	786	
 	
Net Cash (Used in) Provided By Financing Activities

Changes in net cash (used in) provided by financing activities were driven by:	(In millions)	
Proceeds from NRG Yield, Inc. Class C common stock offering on June 29, 2015, net of underwriting discounts and commissions	$	(600	)	
Lower net borrowings from the revolving credit facility	(255	)	
Lower net payments for long-term debt in 2016 compared to 2015	184	
 	
Decrease in net contributions from noncontrolling interests	(115	)	
Increase in dividends and distributions paid to common stockholders due to the increase in dividend per share in 2016 compared to 2015	(22	)	
Debt issuance costs paid in 2015	11	
 	
Payment of distributions to NRG due to NRG's 25% ownership of NRG Wind TE Holdco in 2016	(6	)	
 	$	(803	)	

NOLs, Deferred Tax Assets and Uncertain Tax Position Implications, under ASC 740
As of December 31, 2015, the Company has a cumulative federal NOL carry forward balance of $519 million for financial statement purposes, which will begin expiring in 2033. As a result of the Company's tax position, and based on current forecasts, the Company does not anticipate significant income tax payments for federal, state and local jurisdictions in 2016. Based on the Company's current and expected NOL balances generated primarily by accelerated tax depreciation of its property, plant and equipment, the Company does not expect to pay significant federal income tax for a period of approximately nine years.
The Company is subject to examination by taxing authorities for income tax returns filed in the U.S. federal jurisdiction and various state jurisdictions. The Company is not subject to U.S. federal or state income tax examinations for years prior to 2013. 
The Company has no uncertain tax benefits.

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Off-Balance Sheet Arrangements
Obligations under Certain Guarantee Contracts
The Company may enter into guarantee arrangements in the normal course of business to facilitate commercial transactions with third parties.
Retained or Contingent Interests
The Company does not have any material retained or contingent interests in assets transferred to an unconsolidated entity.
Obligations Arising Out of a Variable Interest in an Unconsolidated Entity
Variable interest in equity investments — As of June 30, 2016, the Company has several investments with an ownership interest percentage of 50% or less in energy and energy-related entities that are accounted for under the equity method. DGPV Holdco 1, DGPV Holdco 2, RPV Holdco and GenConn are variable interest entities for which the Company is not the primary beneficiary.
The Company's pro-rata share of non-recourse debt held by unconsolidated affiliates was approximately $454 million as of June 30, 2016. This indebtedness may restrict the ability of these subsidiaries to issue dividends or distributions to the Company. See also Note 4,  Variable Interest Entities, or VIEs .
Contractual Obligations and Commercial Commitments
The Company has a variety of contractual obligations and other commercial commitments that represent prospective cash requirements in addition to our capital expenditure programs, as disclosed in the Company's 2015 Form 10-K.

Fair Value of Derivative Instruments
The Company may enter into fuel purchase contracts and other energy-related financial instruments to mitigate variability in earnings due to fluctuations in spot market prices and to hedge fuel requirements at certain generation facilities. In addition, in order to mitigate interest rate risk associated with the issuance of variable rate debt, the Company enters into interest rate swap agreements.
The tables below disclose the activities of non-exchange traded contracts accounted for at fair value in accordance with ASC 820. Specifically, these tables disaggregate realized and unrealized changes in fair value; disaggregate estimated fair values at June 30, 2016, based on their level within the fair value hierarchy defined in ASC 820; and indicate the maturities of contracts at June 30, 2016. For a full discussion of the Company's valuation methodology of its contracts, see  Derivative Fair Value Measurements  in  Note 5 ,  Fair Value of Financial Instruments .

Derivative Activity (Losses)/Gains	(In millions)	
Fair value of contracts as of December 31, 2015	$	(100	)	
Contracts realized or otherwise settled during the period	19	
 	
Changes in fair value	(77	)	
Fair Value of contracts as of June 30, 2016	$	(158	)	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Fair Value of contracts as of June 30, 2016	
 	Maturity	 	 	
Fair Value Hierarchy Losses	1 Year or Less	 	Greater Than 1 Year to 3 Years	 	Greater Than 3 Years to 5 Years	 	Greater Than 5 Years	 	Total Fair
Value	
 	(In millions)	
Level 2	$	36	
 	 	$	59	
 	 	$	35	
 	 	$	28	
 	 	$	158	
 	
The Company has elected to disclose derivative assets and liabilities on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. As discussed below in  Quantitative and Qualitative Disclosures about Market Risk -Commodity Price Risk,  NRG, on behalf of the  Company, measures the sensitivity of the portfolio to potential changes in market prices using VaR, a statistical model which attempts to predict risk of loss based on market price and volatility. NRG's risk management policy places a limit on one-day holding period VaR, which limits the net open position.

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Critical Accounting Policies and Estimates
The Company's discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements and related disclosures in compliance with GAAP requires the application of appropriate technical accounting rules and guidance as well as the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. The application of these policies necessarily involves judgments regarding future events, including the likelihood of success of particular projects, legal and regulatory challenges, and the fair value of certain assets and liabilities. These judgments, in and of themselves, could materially affect the financial statements and disclosures based on varying assumptions, which may be appropriate to use. In addition, the financial and operating environment may also have a significant effect, not only on the operation of the business, but on the results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even if the nature of the accounting policies has not changed.
On an ongoing basis, the Company evaluates these estimates, utilizing historic experience, consultation with experts and other methods the Company considers reasonable. In any event, actual results may differ substantially from the Company's estimates. Any effects on the Company's business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the information that gives rise to the revision becomes known.
The Company's significant accounting policies are summarized in Note 2, Summary of Significant Accounting Policies, to the Company's 2015 Form 10-K. The Company identifies its most critical accounting policies as those that are the most pervasive and important to the portrayal of the Company's financial position and results of operations, and that require the most difficult, subjective and/or complex judgments by management regarding estimates about matters that are inherently uncertain. The Company's critical accounting policies include income taxes and valuation allowance for deferred tax assets, impairment of long lived assets and other intangible assets and acquisition accounting.
Recent Accounting Developments
See Note 2, Summary of Significant Accounting Policies, for a discussion of recent accounting developments.

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