UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

x	 	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 2015.	
 	 	 	
o	 	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from                      to                       .	
Commission File Number: 001-36002
NRG Yield, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)	 	46-1777204
(I.R.S. Employer Identification No.)	
 	 	 	
211 Carnegie Center, Princeton, New Jersey
(Address of principal executive offices)	 	08540
(Zip Code)	
(609) 524-4500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	 	Name of Exchange on Which Registered	
Common Stock, Class A, par value $0.01	 	New York Stock Exchange	
Common Stock, Class C, par value $0.01	 	New York Stock Exchange	
     Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes x    No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.   Yes  o     No  x
Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x     No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x     No  o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	 	Accelerated filer o	 	Non-accelerated filer o	 	Smaller reporting company o	
 	 	 	 	(Do not check if a smaller reporting company)	 	 	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes o    No x
As of the last business day of the most recently completed second fiscal quarter, the aggregate market value of the common stock of the registrant held by non-affiliates was approximately $1,944,615,167 based on the closing sale prices of such shares as reported on the New York Stock Exchange.
Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.

Class	 	Outstanding at January 31, 2016	
Common Stock, Class A, par value $0.01 per share	 	34,586,250	
Common Stock, Class B, par value $0.01 per share	 	42,738,750	
Common Stock, Class C, par value $0.01 per share	 	62,784,250	
Common Stock, Class D, par value $0.01 per share	 	42,738,750	

Documents Incorporated by Reference:
Portions of the Registrant's Definitive Proxy Statement relating to its 2016 Annual Meeting of Stockholders
are incorporated by reference into Part III of this Annual Report on Form 10-K

 	 	 	 	 	

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TABLE OF CONTENTS
Index

GLOSSARY OF TERMS	3	
PART I	6	
Item 1 — Business	6	
Item 1A — Risk Factors	14	
Item 1B — Unresolved Staff Comments	32	
Item 2 — Properties	33	
Item 3 — Legal Proceedings	36	
Item 4 — Mine Safety Disclosures	36	
PART II	37	
Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	37	
Item 6 — Selected Financial Data	39	
Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations	41	
Item 7A — Quantitative and Qualitative Disclosures About Market Risk	62	
Item 8 — Financial Statements and Supplementary Data	62	
Item 9 — Changes in Disagreements With Accountants on Accounting and Financial Disclosure	63	
Item 9A — Controls and Procedures	63	
Item 9B — Other Information	65	
PART III	65	
Item 10 — Directors, Executive Officers and Corporate Governance	65	
Item 11 — Executive Compensation	67	
Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	67	
Item 13 — Certain Relationships and Related Transactions, and Director Independence	67	
Item 14 — Principal Accounting Fees and Services	67	
PART IV	68	
Item 15 — Exhibits, Financial Statement Schedules	68	
EXHIBIT INDEX	120	

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GLOSSARY OF TERMS
When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:

2019 Convertible Notes	 	$345 million aggregate principal amount of 3.50% Convertible Notes due 2019	
2020 Convertible Notes	 	$287.5 million aggregate principal amount of 3.25% Convertible Notes due 2020	
Alta Sellers	 	Terra-Gen Finance Company, LLC and certain of its affiliates	
Alta TE Holdco	 	Alta Wind X-XI TE Holdco LLC	
Alta Wind Portfolio	 	Seven wind facilities that total 947 MW located in Tehachapi, California and a portfolio of associated land leases	
AOCL	 	Accumulated Other Comprehensive Loss	
ARRA	 	American Recovery and Reinvestment Act of 2009	
ASC	 	The FASB Accounting Standards Codification, which the FASB established as the source of
authoritative U.S. GAAP	
ASU	 	Accounting Standards Updates – updates to the ASC	
Buffalo Bear	 	Buffalo Bear, LLC, the operating subsidiary of Tapestry Wind LLC, which owns the Buffalo Bear project	
CAA	 	Clean Air Act	
CAFD	 	Cash Available For Distribution, which the Company defines 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.	
CfD	 	Contract for Differences	
CFTC	 	U.S. Commodity Future Trading Commission	
CO2	 	Carbon Dioxide	
COD	 	Commercial Operations Date	
Code	 	Internal Revenue Code of 1986, as amended	
Company	 	NRG Yield, Inc. together with its consolidated subsidiaries	
CVSR	 	California Valley Solar Ranch	
DGCL	 	Delaware General Corporation Law	
DGPV Holdco 1	 	NRG DGPV Holdco 1 LLC	
DGPV Holdco 2	 	NRG DGPV Holdco 2 LLC	
Distributed Solar	 	Solar power projects, typically less than 20 MW in size, that primarily sell power produced to customers for usage on site, or are interconnected to sell power into the local distribution grid	
Dodd-Frank Act	 	The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2012	
Drop Down Assets	 	Collectively, the June 2014 Drop Down Assets, the January 2015 Drop Down Assets and the November 2015 Drop Down Assets	
Economic gross margin	 	Energy and capacity revenue, less cost of fuels	
El Segundo	 	NRG West Holdings LLC, the subsidiary of Natural Gas Repowering LLC, which owns the El Segundo Energy Center project	
EME	 	Edison Mission Energy	
EPC	 	Engineering, Procurement and Construction	
ERCOT	 	Electric Reliability Council of Texas, the ISO and the regional reliability coordinator of the various electricity systems within Texas	

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EWG	 	Exempt Wholesale Generator	
Exchange Act	 	The Securities Exchange Act of 1934, as amended	
FASB	 	Financial Accounting Standards Board	
FCM	 	Forward Capacity Market	
FERC	 	Federal Energy Regulatory Commission	
FFB	 	Federal Financing Bank	
FPA	 	Federal Power Act	
GenConn	 	GenConn Energy LLC	
GHG	 	Greenhouse gases	
HLBV	 	Hypothetical Liquidation at Book Value	
IASB	 	International Accounting Standards Board	
IPO	 	Initial Public Offering	
IRS	 	Internal Revenue Service	
ISO	 	Independent System Operator, also referred to as Regional Transmission Organization, or RTO	
ISO-NE	 	ISO New England Inc.	
ITC	 	Investment Tax Credit	
January 2015 Drop Down Assets	 	The Laredo Ridge, Tapestry and Walnut Creek projects, which were acquired by Yield Operating LLC from NRG on January 2, 2015	
June 2014 Drop Down Assets	 	The TA High Desert, Kansas South and El Segundo projects, which were acquired by Yield Operating LLC from NRG on June 30, 2014	
Kansas South	 	NRG Solar Kansas South LLC, the operating subsidiary of NRG Solar Kansas South Holdings LLC, which owns the Kansas South project	
Laredo Ridge	 	Laredo Ridge Wind, LLC, the operating subsidiary of Mission Wind Laredo, LLC, which owns the Laredo Ridge project	
LIBOR	 	London Inter-Bank Offered Rate	
Marsh Landing	 	NRG Marsh Landing LLC, formerly GenOn Marsh Landing LLC	
MMBtu	 	Million British Thermal Units	
MW	 	Megawatt	
MWh	 	Saleable megawatt hours, net of internal/parasitic load megawatt-hours	
MWt	 	Megawatts Thermal Equivalent	
NERC	 	North American Electric Reliability Corporation	
Net Exposure	 	Counterparty credit exposure to NRG Yield, Inc. net of collateral	
NOLs	 	Net Operating Losses	
November 2015 Drop Down Assets	 	75% of the Class B interests of NRG Wind TE Holdco, which owns a portfolio of 12 wind facilities totaling 814 net MW, which was acquired by Yield Operating LLC from NRG on November 3, 2015	
NOx	 	Nitrogen Oxide	
NPNS	 	Normal Purchases and Normal Sales	
NRG	 	NRG Energy, Inc.	
NRG Wind TE Holdco	 	NRG Wind TE Holdco LLC	
NRG Yield, Inc.	 	NRG Yield, Inc., together with its consolidated subsidiaries, or the Company	
NRG Yield LLC	 	The holding company through which the projects are owned by NRG, the holder of Class B and Class D units, and NRG Yield, Inc., the holder of the Class A and Class C units	
NRG Yield Operating LLC	 	The holder of the project assets that belong to NRG Yield LLC	
NSPS	 	New Source Performance Standards	
OCI/OCL	 	Other comprehensive income/loss	
OSHA	 	Occupational Safety and Health Administration	
PG&E	 	Pacific Gas & Electric Company	

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Pinnacle	 	Pinnacle Wind, LLC, the operating subsidiary of Tapestry Wind LLC, which owns the Pinnacle project	
PJM	 	PJM Interconnection, LLC	
PPA	 	Power Purchase Agreement	
PTC	 	Production Tax Credit	
PUCT	 	Public Utility Commission of Texas	
PUHCA	 	Public Utility Holding Company Act of 2005	
PURPA	 	Public Utility Regulatory Policies Act of 1978	
QF	 	Qualifying Facility under PURPA	
Recapitalization	 	The adoption of the Company's Second Amended and Restated Certificate of Incorporation which authorized two new classes of common stock, Class C common stock and Class D common stock, and distributed shares of such new classes of common stock to holders of the Company’s outstanding Class A common stock and Class B common stock, respectively, through a stock split on May 14, 2015 	
ROFO Agreement	 	Amended and Restated Right of First Offer Agreement between the Company and NRG	
RPM	 	Reliability Pricing Model	
RPS	 	Renewable Portfolio Standards	
RPV Holdco	 	NRG RPV Holdco 1 LLC	
RTO	 	Regional Transmission Organization	
SCE	 	Southern California Edison	
SEC	 	U.S. Securities and Exchange Commission	
Senior Notes	 	NRG Yield Operating LLC's $500 million of 5.375% unsecured senior notes due 2024	
SO2	 	Sulfur Dioxide	
TA High Desert	 	TA-High Desert LLC, the operating subsidiary of NRG Solar Mayfair LLC, which owns the TA High Desert project	
Taloga	 	Taloga Wind, LLC, the operating subsidiary of Tapestry Wind LLC, which owns the Taloga project	
Tapestry	 	Collection of the Pinnacle, Buffalo Bear and Taloga projects	
Terra-Gen	 	Terra-Gen Operating Company, LLC	
Thermal Business	 	The Company's thermal business, which consists of thermal infrastructure assets that provide steam, hot water and/or chilled water, and in some instances electricity, to commercial businesses, universities, hospitals and governmental units	
U.S.	 	United States of America	
U.S. DOE	 	U.S. Department of Energy	
U.S. GAAP	 	Accounting principles generally accepted in the United States	
Utility Scale Solar	 	Solar power projects, typically 20 MW or greater in size (on an alternating current, or AC, basis), that are interconnected into the transmission or distribution grid to sell power at a wholesale level	
VaR	 	Value at Risk	
VIE	 	Variable Interest Entity	
Walnut Creek	 	NRG Walnut Creek, LLC, the operating subsidiary of WCEP Holdings, LLC, which owns the Walnut Creek project	

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PART I
Item 1 — Business
General
NRG Yield, Inc., together with its consolidated subsidiaries, or 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 renewable and conventional generation portfolio as of December 31, 2015 collectively represents  4,435 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.
A complete listing of the Company's interests in facilities, operations and/or projects owned or leased as of December 31, 2015 can be found in Item 2 —  Properties.

History

The Company was formed by NRG as a Delaware corporation on December 20, 2012. On July 22, 2013, the Company closed the initial public offering of 22,511,250 shares of its Class A common stock at an offering price of $22.00 per share. In connection with the offering, the Company’s shares of Class A common stock began trading on the New York Stock Exchange under the symbol “NYLD”. The net proceeds to the Company from the offering, after deducting underwriting discounts, were approximately $468 million, of which the Company used $395 million to purchase 19,011,250 NRG Yield LLC Class A units from NRG and $73 million to purchase 3,500,000 NRG Yield LLC 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.
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.
Effective 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. Following the Recapitalization, the Company's Class A common stock continued trading on the New York Stock Exchange under the new ticker symbol "NYLD.A" and the Class C common stock began trading under the ticker symbol "NYLD". 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 and utilized the proceeds of the offering to acquire 28,198,000 Class C units of NRG Yield LLC.
NRG, through its holdings of Class B common stock and Class D common stock, has a 55.1% voting interest in the Company and receives distributions from NRG Yield LLC through its ownership of Class B units and Class D units. The holders of the Company's issued and outstanding shares of Class A common stock and Class C common stock are entitled to dividends as declared and have 44.9% of the voting power in the Company.
As of December 31, 2015, NRG owned 42,738,750 NRG Yield LLC Class B units and 42,738,750 NRG Yield LLC Class D units and the Company owned 34,586,250 NRG Yield LLC Class A units and 62,784,250 NRG Yield LLC Class C units. As of December 31, 2015, the Company and NRG have 53.3% and 46.7% economic interests in NRG Yield LLC, respectively. The Company is the sole managing member of NRG Yield LLC and operates and controls all of its business and affairs and consolidates the financial results of NRG Yield LLC and its subsidiaries. NRG Yield LLC is a holding company for the companies that directly and indirectly own and operate the Company's business. As a result of the current ownership of the Class B common stock and Class D common stock, NRG continues at the present time to control the Company, and the Company in turn, as the sole managing member of NRG Yield LLC, controls NRG Yield LLC and its subsidiaries.

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The diagram below depicts the Company’s organizational structure as of December 31, 2015:

Business Strategy
The Company's primary business strategy is to focus on the acquisition and ownership of assets with predictable, long-term cash flows in order that it may be able to increase the cash dividends of Class A and Class C common stock over time without compromising the ongoing stability of the business. The Company's plan for executing this strategy includes the following key components:
Focus on contracted renewable energy and conventional generation and thermal infrastructure assets. The Company owns and operates utility scale and distributed renewable energy and natural gas-fired generation, thermal and other infrastructure assets with proven technologies, low operating risks and stable cash flows. The Company believes by focusing on this core asset class and leveraging its industry knowledge, it will maximize its strategic opportunities, be a leader in operational efficiency and maximize its overall financial performance.
Growing the business through acquisitions of contracted operating assets. The Company believes that its base of operations and relationship with NRG provide a platform in the conventional and renewable power generation and thermal sectors for strategic growth through cash accretive and tax advantaged acquisitions complementary to its existing portfolio. In connection with its initial public offering, the Company entered into a Right of First Offer Agreement with NRG, which was amended and restated in connection with the Recapitalization, or as amended and restated, the ROFO Agreement. Under the ROFO Agreement, NRG has granted the Company and its affiliates a right of first offer on any proposed sale, transfer or other disposition of certain assets of NRG for a period of seven years from the completion of the Recapitalization. In addition to the assets described in the table below which reflects the remaining assets subject to sale, the ROFO Agreement also provides the Company with a right of first offer with respect to up to $250 million of equity in one or more residential or distributed solar generation portfolios developed by affiliates of NRG, together with the assets listed in the table below, the NRG ROFO Assets.

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Asset	 	Fuel Type	 	Rated Capacity
(MW)(a)	 	COD	
CVSR(b)	 	Solar	 	128	 	2013	
Ivanpah(c)	 	Solar	 	193	 	2013	
Agua Caliente(d)	 	Solar	 	148	 	2014	
Carlsbad	 	Conventional	 	527	 	2018	
Puente/Mandalay	 	Conventional	 	262	 	2020	
TE Wind Holdco(e):	 	 	 	 	 	 	
Elkhorn Ridge	 	Wind	 	13	 	2009	
San Juan Mesa	 	Wind	 	22	 	2005	
Wildorado	 	Wind	 	40	 	2007	
Crosswinds	 	Wind	 	5	 	2007	
Forward	 	Wind	 	7	 	2008	
Hardin	 	Wind	 	4	 	2007	
Odin	 	Wind	 	5	 	2007	
Sleeping Bear	 	Wind	 	24	 	2007	
Spanish Fork	 	Wind	 	5	 	2008	
Goat Wind	 	Wind	 	37	 	2008/2009	
Lookout	 	Wind	 	9	 	2008	
Elbow Creek	 	Wind	 	30	 	2008	
Community	 	Wind	 	30	 	2011	
Jeffers	 	Wind	 	50	 	2008	
Minnesota Portfolio(f)	 	Wind	 	40	 	2003/2006	

 	
 	
(a) Represents the maximum, or rated, electricity generating capacity of the facility in MW multiplied by NRG's percentage ownership interest in the facility as of December 31, 2015.
(b) Represents NRG’s remaining 51.05% ownership interest in CVSR.
(c) Represents 49.95% of NRG's 50.01% ownership interest in Ivanpah. Following a sale of this 49.95% interest, the remaining 50.05% of Ivanpah would be owned by NRG, Google Inc. and BrightSource Energy Inc.
(d) Represents NRG’s 51% ownership interest in Agua Caliente. The remaining 49% of Agua Caliente is owned by MidAmerican Energy Holdings Inc.
(e) Represents NRG's remaining 25% of the Class B interests of NRG Wind TE Holdco. NRG Yield, Inc. acquired 75% of the Class B interests in November 2015. A tax equity investor owns the Class A interests in NRG Wind TE Holdco.
(f)  Includes Bingham Lake, Eastridge, and Westridge projects.
NRG is not obligated to sell the remaining NRG ROFO Assets to the Company and, if offered by NRG, the Company cannot be sure whether these assets will be offered on acceptable terms, or that the Company will choose to consummate such acquisitions. In addition, NRG may offer additional assets to the Company, as described in Item 7 —  Management's Discussion and Analysis of Financial Condition and Results of Operations . The Company may also have opportunities to acquire other generation and thermal infrastructure assets from third parties where the Company believes its knowledge of the market and operating expertise provides it with a competitive advantage.

Primary Focus on North America. The Company intends to primarily focus its investments in North America (including the unincorporated territories of the U.S.). The Company believes that industry fundamentals in North America present it with significant opportunity to acquire renewable, natural gas-fired generation and thermal infrastructure assets, without creating significant exposure to currency and sovereign risk. By primarily focusing its efforts on North America, the Company believes it will best leverage its regional knowledge of power markets, industry relationships and skill sets to maximize the performance of the Company.
Maintain sound financial practices to grow the dividend. The Company intends to maintain a commitment to disciplined financial analysis and a balanced capital structure to enable it to increase its quarterly dividend over time and serve the long-term interests of its stockholders. The Company's financial practices include a risk and credit policy focused on transacting with credit-worthy counterparties; a financing policy, which focuses on seeking an optimal capital structure through various capital formation alternatives to minimize interest rate and refinancing risks, ensure stable long-term dividends and maximize value; and a dividend policy that is based on distributing a significant portion of CAFD each quarter that the Company receives from NRG Yield LLC, subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations. The Company intends to evaluate various alternatives for financing future acquisitions and refinancing of existing project-level debt, in each case, to reduce the cost of debt, extend maturities and maximize CAFD. The Company believes it has additional flexibility to seek alternative financing arrangements, including, but not limited to, debt financings at a holding company level.

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Competition
Power generation is a capital-intensive business with numerous and diverse industry participants. The Company competes on the basis of the location of its plants and on the basis of contract price and terms of individual project. Within the power industry, there is a wide variation in terms of the capabilities, resources, nature and identity of the companies with whom the Company competes with depending on the market. Competitors for energy supply are utilities, independent power producers and other providers of distributed generation. The Company also competes to acquire new projects with solar developers who retain solar power plant ownership, independent power producers, financial investors and other dividend, growth-oriented companies. Competitive conditions may be substantially affected by various forms of energy legislation and regulation considered by federal, state and local legislatures and administrative agencies. Such laws and regulations may substantially increase the costs of acquiring, constructing and operating projects, and it could be difficult for the Company to adapt to and operate under such laws and regulations.
The Company's thermal business has certain cost efficiencies that may form barriers to entry. Generally, there is only one district energy system in a given territory, for which the only competition comes from on-site systems. While the district energy system can usually make an effective case for the efficiency of its services, some building owners nonetheless may opt for on-site systems, either due to corporate policies regarding allocation of capital, unique situations where an on-site system might in fact prove more efficient, or because of previously committed capital in systems that are already on-site. Growth in existing district energy systems generally comes from new building construction or existing building conversions within the service territory of the district energy provider.
Competitive Strengths
Stable, high quality cash flows. The Company's facilities have a highly stable, predictable cash flow profile consisting of predominantly long-life electric generation assets that sell electricity under long-term fixed priced contracts or pursuant to regulated rates with investment grade and certain other credit-worthy counterparties. Additionally, the Company's facilities have minimal fuel risk. For the Company's five conventional assets, fuel is provided by the toll counterparty or the cost thereof is a pass-through cost under the CfD. Renewable facilities have no fuel costs, and most of the Company's thermal infrastructure assets have contractual or regulatory tariff mechanisms for fuel cost recovery. The offtake agreements for the Company's conventional and renewable generation facilities have a weighted-average remaining duration of approximately 17 years as of December 31, 2015, based on CAFD, providing long-term cash flow stability. The Company's generation offtake agreements with counterparties for whom credit ratings are available have a weighted-average Moody’s rating of A3 based on rated capacity under contract. All of the Company's assets are in the U.S. and accordingly have no currency or repatriation risks.
High quality, long-lived assets with low operating and capital requirements.  The Company benefits from a portfolio of relatively newly-constructed assets, other than thermal infrastructure assets. The Company's assets are comprised of proven and reliable technologies, provided by leading original solar and wind equipment manufacturers such as General Electric, Siemens AG, SunPower Corporation, or SunPower, First Solar Inc., or First Solar, Vestas, Suzlon and Mitsubishi. Given the modern nature of the portfolio, which includes a substantial number of relatively low operating and maintenance cost solar and wind generation assets, the Company expects to achieve high fleet availability and expend modest maintenance-related capital expenditures. The Company estimates each of its solar and wind portfolios have weighted average remaining expected lives based on CAFD of approximately 20 years. Additionally, with the support of services provided by NRG, the Company expects to continue to implement the same rigorous preventative operating and management practices that NRG uses across its fleet of assets. In 2015, NRG achieved a 0.71 OSHA recordable rate, which is within the top quartile plant operating performance for its entire fleet, based on applicable OSHA standards.
Significant scale and diversity. The Company owns and operates a large and diverse portfolio of contracted electric generation and thermal infrastructure assets. As of December 31, 2015, the Company's  4,435  net MW contracted generation portfolio benefits from significant diversification in terms of technology, fuel type, counterparty and geography. The Company's thermal business consists of twelve operations, seven of which are district energy centers that provide steam and chilled water to approximately 695 customers, and five of which provide generation. The Company believes its scale and access to best practices across the fleet improves its business development opportunities through enhanced industry relationships, reputation and understanding of regional power market dynamics. Furthermore, the Company's diversification reduces its operating risk profile and reliance on any single market.

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Relationship with NRG. The Company believes its relationship with NRG, including NRG’s expressed intention to maintain a controlling interest in the Company, provides significant benefits, including management and operational expertise, and future growth opportunities. The Company's executive officers have considerable experience in owning and operating, as well as developing, acquiring and integrating, generation and thermal infrastructure assets:
• NRG Management and Operational Expertise. The Company has access to the significant resources of NRG, the largest competitive power generator in the U.S., to support the operational, finance, legal, regulatory and environmental aspects, and growth strategy of its business. As such, the Company believes it avails itself of best-in-class resources, including management and operational expertise.
• NRG Asset Development and Acquisition Track Record. NRG's development and strategic teams are focused on the development and acquisition of renewable and conventional generation assets. They have successfully helped grow NRG's power generation portfolio from 24,365 net MWs at the end of 2009 to 49,324 net MWs as of December 31, 2015.
• NRG Financing Experience. The Company believes NRG has demonstrated a successful track record of sourcing attractive low-cost, long duration capital to fund project development and acquisitions. The Company expects to realize significant benefits from NRG’s financing and structuring expertise as well as its relationships with financial institutions and other lenders.
Environmentally well-positioned portfolio of assets. On a net capacity basis, the Company's portfolio of electric generation assets consists of 2,490 net MW of renewable generation capacity that are non-emitting sources of power generation. The Company's conventional assets consist of the dual fuel-fired GenConn assets as well as the Marsh Landing and Walnut Creek simple cycle natural gas-fired peaking generation facilities and the El Segundo combined cycle natural gas-fired peaking facility. The Company does not anticipate having to expend any significant capital expenditures in the foreseeable future to comply with current environmental regulations applicable to its generation assets. Taken as a whole, the Company believes its strategy will be a net beneficiary of current and potential environmental legislation and regulatory requirements that may serve as a catalyst for capacity retirements and improve market opportunities for environmentally well-positioned assets like the Company's assets once its current offtake agreements expire.
Thermal infrastructure business has high entry costs. Significant capital has been invested to construct the Company's thermal infrastructure assets, serving as a barrier to entry in the markets in which such assets operate. As of December 31, 2015, the Company's thermal gross property, plant, and equipment was approximately $452 million. The Company's thermal district energy centers are located in urban city areas, with the chilled water and steam delivery systems located underground. Constructing underground delivery systems in urban areas requires long lead times for permitting, rights of way and inspections and is costly. By contrast, the incremental cost to add new customers in existing markets is relatively low. Once thermal infrastructure is established, the Company believes it has the ability to retain customers over long periods of time and to compete effectively for additional business against stand-alone on-site heating and cooling generation facilities. Installation of stand-alone equipment can require significant modification to a building as well as significant space for equipment and funding for capital expenditures. The Company's system technologies often provide economies of scale in terms of fuel procurement, ability to switch between multiple types of fuel to generate thermal energy, and fuel conversion efficiency. The Company's top ten thermal customers, which make up approximately 7% of the Company's consolidated revenues for the year ended December 31, 2015, have had a relationship with the Company for an average of over 20 years.
Segment Review
The following table summarizes the Company's operating revenues, net income and assets by segment for the years ended December 31, 2015, 2014, and 2013, as discussed in Item 15 — Note 12,  Segment Reporting , to the Consolidated Financial Statements. Refer to that footnote for additional information about the Company's segments. In addition, refer to Item 2 —  Properties , for information about the facilities in each of the Company's segments. All amounts have been recast to include the effect of the acquisitions of the Drop Down Assets, which 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).

 	Year ended December 31, 2015	
(In millions)	Conventional Generation	
 	Renewables	
 	Thermal	
 	Corporate	
 	Total	
Operating revenues	$	336	
 	 	$	359	
 	 	$	174	
 	 	$	—	
 	 	$	869	
 	
Net income (loss)	156	
 	 	(35	)	 	22	
 	 	(88	)	 	55	
 	
Total assets	2,102	
 	 	5,056	
 	 	428	
 	 	189	
 	 	7,775	

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 	Year ended December 31, 2014	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	317	
 	 	$	234	
 	 	$	195	
 	 	$	—	
 	 	$	746	
 	
Net income (loss)	141	
 	 	(28	)	 	31	
 	 	(45	)	 	99	
 	
Total assets	2,169	
 	 	4,790	
 	 	436	
 	 	465	
 	 	7,860	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31, 2013	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	138	
 	 	$	97	
 	 	$	152	
 	 	$	—	
 	 	$	387	
 	
Net income (loss)	87	
 	 	31	
 	 	20	
 	 	(15	)	 	123	
 	
Government Incentives
Government incentives can enhance the economics of the Company's generating assets and investments by providing, for example, loan guarantees, cash grants, favorable tax treatment, favorable depreciation rules, or other incentives.  Certain recent government approvals have enhanced federal incentives for renewable generation — including through the extension of the wind power Production Tax Credit and the extension of the solar Investment Tax Credit as further described in  Regulatory Developments  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.

Regulatory Matters
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 agencies 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 an 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 PUCT.
CFTC
The CFTC, among other things, has regulatory oversight authority over the trading of swaps, futures and many commodities under the Commodity Exchange Act, or CEA. Since 2010, there have been a number of reforms to the regulation of the derivatives markets, both in the U.S. and internationally. These regulations, and any further changes thereto, or adoption of additional regulations, including any regulations relating to position limits on futures and other derivatives or margin for derivatives, could negatively impact the Company’s ability to hedge its portfolio in an efficient, cost-effective manner by, among other things, potentially decreasing liquidity in the forward commodity and derivatives markets or limiting the Company’s ability to utilize non-cash collateral for derivatives transactions.
FERC
FERC, among other things, regulates the transmission and the wholesale sale of electricity in interstate commerce under the authority of the FPA. The transmission of electric energy occurring wholly within ERCOT is not subject to FERC’s jurisdiction under Sections 203 or 205 of the FPA. Under existing regulations, FERC determines whether an entity owning a generation facility is an EWG, as defined in the PUHCA. FERC also determines whether a generation facility meets the ownership and technical criteria of a QF under the PURPA. Each of the Company’s non-ERCOT U.S. generating facilities qualifies as an EWG.
The FPA gives FERC exclusive rate-making jurisdiction over the wholesale sale of electricity and transmission of electricity in interstate commerce of public utilities (as defined by the FPA). Under the FPA, FERC, with certain exceptions, regulates the owners of facilities used for the wholesale sale of electricity or transmission in interstate commerce as public utilities, and establishes market rules that are just and reasonable.

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Public utilities are required to obtain FERC’s acceptance, pursuant to Section 205 of the FPA, of their rate schedules for the wholesale sale of electricity. All of the Company’s non-QF generating entities located outside of ERCOT make sales of electricity pursuant to market-based rates, as opposed to traditional cost-of-service regulated rates. Every three years FERC will conduct a review of the Company’s market based rates and potential market power on a regional basis.
In accordance with the Energy Policy Act of 2005, FERC has approved the NERC as the national Energy Reliability Organization, or ERO. As the ERO, NERC is responsible for the development and enforcement of mandatory reliability standards for the wholesale electric power system. In addition to complying with NERC requirements, each NRG entity must comply with the requirements of the regional reliability entity for the region in which it is located.
The PURPA was passed in 1978 in large part to promote increased energy efficiency and development of independent power producers. The PURPA created QFs to further both goals, and FERC is primarily charged with administering the PURPA as it applies to QFs. Certain QFs are exempt from regulation, either in whole or in part, under the FPA as public utilities.
The PUHCA provides FERC with certain authority over and access to books and records of public utility holding companies not otherwise exempt by virtue of their ownership of EWGs, QFs, and Foreign Utility Companies. The Company is exempt from many of the accounting, record retention, and reporting requirements of the PUHCA.
Regulatory Developments
U.S. Supreme Court Agrees to Consider the Constitutionality of Maryland's Generator Contracting Programs — On October 19, 2015, the U.S. Supreme Court agreed to hear challenges to one of two cases involving the rights of states to enter into long-term contracts for power generation facilities. The case involves the right of the Maryland Public Service Commission to award long-term power purchase contracts to a generation developer to encourage the construction of new generation capacity in Maryland. The constitutionality of the long-term contracts was challenged in the U.S. District Court for the District of Maryland, which, in an October 24, 2013, decision, found that the contract violated the Supremacy Clause of the U.S. Constitution and was invalid. On June 30, 2014, the U.S. Court of Appeals for the Fourth Circuit affirmed the Maryland District Court's decision. A companion case alleging similar facts in New Jersey will be decided in accordance with the Supreme Court’s decision in the Maryland case. NRG filed a friend-of-the-court brief urging the Supreme Court to uphold the right of states to enter into long-term contracts, which play an important role in financing new generation resources. The Supreme Court heard oral argument on February 24, 2016, and the outcome of this litigation could have broad impacts on how states contract with new generation resources, as well as how such contracted resources interact with the wholesale markets.
Solar ITC and Wind PTC Extensions — In December 2015, the U.S. Congress enacted an extension of the 30% solar ITC so that projects that begin construction in 2016 through 2019 will continue to qualify for the 30% ITC.  Projects beginning construction in 2020 and 2021 will be eligible for the ITC at the rates of 26% and 22%, respectively.  The same legislation also extended the 10-year wind PTC for wind projects that begin construction in years 2016 through 2019.  Wind projects that begin construction in the years 2017, 2018 and 2019 are eligible for PTC at 80%, 60% and 40% of the statutory rate per kWh, respectively. The extension of the ITC and PTC could promote additional development of solar and wind energy resources.
Environmental Matters
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 regarding 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.
In October 2015, the EPA promulgated a GHG emissions rule for existing fossil-fuel-fired electric generating units.  The rule is called the Clean Power Plan, or CPP. On February 9, 2016, the U.S. Supreme Court stayed the CPP. The CPP faces numerous legal challenges that likely will take several years to resolve. If the CPP is eventually upheld, it may take several more years for the impacts of this rule to be clear as states would be required to develop and put in place plans to implement the rule to achieve state-specific goals.
Customers
The Company sells its electricity and environmental attributes, including RECs, primarily to local utilities under long-term, fixed-price PPAs. During the year ended December 31, 2015, the Company derived approximately 43% of its consolidated revenue from Southern California Edison, or SCE, and approximately 17% of its consolidated revenue from Pacific Gas and Electric, or PG&E.

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Employees
The Company does not employ any of the individuals who manage operations. The personnel that carry out these activities are employees of NRG, and their services are provided for the Company's benefit under the Management Services Agreement and project operations and maintenance agreements with NRG as described in Item 15 — Note 14 , Related Party Transactions , to the Consolidated Financial Statements.
Available Information
The Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are available free of charge through the Company's website,  www.nrgyield.com , as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The Company also routinely posts press releases, presentations, webcasts, and other information regarding the Company on its website.

13

                        

Item 1A — Risk Factors
Risks Related to the Company's Business
Certain facilities are newly constructed and may not perform as expected.
Certain of the Company's conventional and renewable assets are newly constructed. The ability of these facilities to meet the Company's performance expectations is subject to the risks inherent in newly constructed power generation facilities and the construction of such facilities, including, but not limited to, degradation of equipment in excess of the Company's expectations, system failures, and outages. The failure of these facilities to perform as the Company expects could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows and its ability to pay dividends to holders of the Company's common stock.
Pursuant to the Company's cash dividend policy, the Company intends to distribute all or substantially all of the CAFD through regular quarterly distributions and dividends, and the Company's ability to grow and make acquisitions through cash on hand could be limited.
The Company expects to distribute all or substantially all of the CAFD each quarter and to rely primarily upon external financing sources, including the issuance of debt and equity securities and, if applicable, borrowings under the Company's amended and restated revolving credit facility to fund acquisitions and growth capital expenditures. The Company may be precluded from pursuing otherwise attractive acquisitions if the projected short-term cash flow from the acquisition or investment is not adequate to service the capital raised to fund the acquisition or investment, after giving effect to the Company's available cash reserves. The Company's growth may not be as fast as that of businesses that reinvest their available cash to expand ongoing operations. To the extent the Company issues additional equity securities in connection with any acquisitions or growth capital expenditures, the payment of dividends on these additional equity securities may increase the risk that the Company will be unable to maintain or increase its per share dividend. The incurrence of bank borrowings or other debt by NRG Yield Operating LLC or by the Company's project-level subsidiaries to finance the Company’s growth strategy will result in increased interest expense and the imposition of additional or more restrictive covenants, which, in turn, may impact the cash distributions the Company receives to distribute to holders of the Company’s common stock.
The Company may not be able to effectively identify or consummate any future acquisitions on favorable terms, or at all.

The Company's business strategy includes growth through the acquisitions of additional generation assets (including through corporate acquisitions). This strategy depends on the Company’s ability to successfully identify and evaluate acquisition opportunities and consummate acquisitions on favorable terms. However, the number of acquisition opportunities is limited. In addition, the Company will compete with other companies for these limited acquisition opportunities, which may increase the Company’s cost of making acquisitions or cause the Company to refrain from making acquisitions at all. Some of the Company’s competitors for acquisitions are much larger than the Company with substantially greater resources. These companies may be able to pay more for acquisitions and may be able to identify, evaluate, bid for and purchase a greater number of assets than the Company’s financial or human resources permit. If the Company is unable to identify and consummate future acquisitions, it will impede the Company’s ability to execute its growth strategy and limit the Company’s ability to increase the amount of dividends paid to holders of the Company’s common stock.

Furthermore, the Company’s ability to acquire future renewable facilities may depend on the viability of renewable assets generally. These assets currently are largely contingent on public policy mechanisms including ITCs, cash grants, loan guarantees, accelerated depreciation, RPS and carbon trading plans. These mechanisms have been implemented at the state and federal levels to support the development of renewable generation, demand-side and smart grid and other clean infrastructure technologies. The availability and continuation of public policy support mechanisms will drive a significant part of the economics and viability of the Company’s growth strategy and expansion into clean energy investments.

The Company’s ability to effectively consummate future acquisitions will also depend on the Company’s ability to arrange the required or desired financing for acquisitions.

The Company may not have sufficient availability under the Company’s credit facilities or have access to project-level financing on commercially reasonable terms when acquisition opportunities arise. An inability to obtain the required or desired financing could significantly limit the Company’s ability to consummate future acquisitions and effectuate the Company’s growth strategy. If financing is available, utilization of the Company’s credit facilities or project-level financing for all or a portion of the purchase price of an acquisition could significantly increase the Company’s interest expense, impose additional or more restrictive

14

                        

covenants and reduce CAFD. Similarly, the issuance of additional equity securities as consideration for acquisitions could cause significant stockholder dilution and reduce the Company’s per share CAFD if the acquisitions are not sufficiently accretive. The Company’s ability to consummate future acquisitions may also depend on the Company’s ability to obtain any required regulatory approvals for such acquisitions, including, but not limited to, approval by FERC under Section 203 of the FPA.

Finally, the acquisition of companies and assets are subject to substantial risks, including the failure to identify material problems during due diligence (for which the Company may not be indemnified post-closing), the risk of over-paying for assets (or not making acquisitions on an accretive basis) and the ability to retain customers. Further, the integration and consolidation of acquisitions requires substantial human, financial and other resources and, ultimately, the Company's acquisitions may divert management’s attention from the Company's existing business concerns, disrupt the Company's ongoing business or not be successfully integrated. There can be no assurances that any future acquisitions will perform as expected or that the returns from such acquisitions will support the financing utilized to acquire them or maintain them. As a result, the consummation of acquisitions may have a material adverse effect on the Company's business, financial condition, results of operations and cash flows and ability to pay dividends to holders of the Company’s common stock.
Even if the Company consummates acquisitions that it believes will be accretive to CAFD per share of Class A common stock and Class C common stock, those acquisitions may decrease the CAFD per share of Class A common stock and Class C common stock as a result of incorrect assumptions in the Company’s evaluation of such acquisitions, unforeseen consequences or other external events beyond the Company’s control.
The acquisition of existing generation assets involves the risk of overpaying for such projects (or not making acquisitions on an accretive basis) and failing to retain the customers of such projects. While the Company will perform due diligence on prospective acquisitions, the Company may not discover all potential risks, operational issues or other issues in such generation assets. Further, the integration and consolidation of acquisitions require substantial human, financial and other resources and, ultimately, the Company’s acquisitions may divert the Company’s management’s attention from its existing business concerns, disrupt its ongoing business or not be successfully integrated. Future acquisitions might not perform as expected or the returns from such acquisitions might not support the financing utilized to acquire them or maintain them. A failure to achieve the financial returns the Company expects when it acquires generation assets could have a material adverse effect on the Company’s ability to grow its business and make cash distributions to its Class A and Class C stockholders. Any failure of the Company’s acquired generation assets to be accretive or difficulty in integrating such acquisition into the Company’s business could have a material adverse effect on the Company’s ability to grow its business and make cash distributions to its Class A and Class C stockholders.
The Company’s indebtedness could adversely affect its ability to raise additional capital to fund the Company’s operations or pay dividends. It could also expose the Company to the risk of increased interest rates and limit the Company’s ability to react to changes in the economy or the Company’s industry as well as impact the Company’s CAFD.
As of December 31, 2015, the Company had approximately $4,863 million of total consolidated indebtedness, $3,461 million of which was incurred by the Company's non-guarantor subsidiaries. In addition, the Company’s share of its unconsolidated affiliates’ total indebtedness and letters of credit outstanding as of December 31, 2015, totaled approximately $842 million and $83 million, respectively (calculated as the Company’s unconsolidated affiliates’ total indebtedness as of such date multiplied by the Company’s percentage membership interest in such assets).
The Company’s substantial debt could have important negative consequences on the Company’s financial condition, including:
 	 	
•	increasing the Company’s vulnerability to general economic and industry conditions;	
 	 	
•	requiring a substantial portion of the Company’s cash flow from operations to be dedicated to the payment of principal and interest on the Company’s indebtedness, therefore reducing the Company’s ability to pay dividends to holders of the Company’s capital stock (including the Class A and Class C common stock) or to use the Company’s cash flow to fund its operations, capital expenditures and future business opportunities;	
 	 	
•	limiting the Company’s ability to enter into long-term power sales or fuel purchases which require credit support;	
 	 	
•	limiting the Company’s ability to fund operations or future acquisitions;	
 	 	
•	restricting the Company’s ability to make certain distributions with respect to the Company’s capital stock (including the Class A and Class C common stock) and the ability of the Company’s subsidiaries to make certain distributions to it, in light of restricted payment and other financial covenants in the Company’s credit facilities and other financing agreements;	
 	 	
•	exposing the Company to the risk of increased interest rates because certain of the Company’s borrowings, which may include borrowings under the Company’s amended and restated revolving credit facility, are at variable rates of interest;	
 	 	
•	limiting the Company’s ability to obtain additional financing for working capital including collateral postings, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and	
 	 	
•	limiting the Company’s ability to adjust to changing market conditions and placing it at a competitive disadvantage compared to the Company’s competitors who have less debt.	

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The Company's amended and restated revolving credit facility contains financial and other restrictive covenants that limit the Company’s ability to return capital to stockholders or otherwise engage in activities that may be in the Company’s long-term best interests. The Company’s inability to satisfy certain financial covenants could prevent the Company from paying cash dividends, and the Company’s failure to comply with those and other covenants could result in an event of default which, if not cured or waived, may entitle the related lenders to demand repayment or enforce their security interests, which could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows. In addition, failure to comply with such covenants may entitle the related lenders to demand repayment and accelerate all such indebtedness.
The agreements governing the Company’s project-level financing contain financial and other restrictive covenants that limit the Company’s project subsidiaries’ ability to make distributions to the Company or otherwise engage in activities that may be in the Company’s long-term best interests. The project-level financing agreements generally prohibit distributions from the project entities to the Company unless certain specific conditions are met, including the satisfaction of certain financial ratios. The Company’s inability to satisfy certain financial covenants may prevent cash distributions by the particular project(s) to it and, the Company’s failure to comply with those and other covenants could result in an event of default which, if not cured or waived may entitle the related lenders to demand repayment or enforce their security interests, which could have a material adverse effect on the Company’s business, results of operations and financial condition. In addition, failure to comply with such covenants may entitle the related lenders to demand repayment and accelerate all such indebtedness. If the Company is unable to make distributions from the Company’s project-level subsidiaries, it would likely have a material adverse effect on the Company’s ability to pay dividends to holders of the Company’s common stock.
Letter of credit facilities to support project-level contractual obligations generally need to be renewed after five to seven years, at which time the Company will need to satisfy applicable financial ratios and covenants. If the Company is unable to renew the Company’s letters of credit as expected or replace them with letters of credit under different facilities on favorable terms or at all, the Company may experience a material adverse effect on its business, financial condition or results of operations and cash flows. Furthermore, such inability may constitute a default under certain project-level financing arrangements, restrict the ability of the project-level subsidiary to make distributions to it and/or reduce the amount of cash available at such subsidiary to make distributions to the Company.

In addition, the Company’s ability to arrange financing, either at the corporate level or at a non-recourse project-level subsidiary, and the costs of such capital, are dependent on numerous factors, including:
 	 	
•	general economic and capital market conditions;	
 	 	
•	credit availability from banks and other financial institutions;	
 	 	
•	investor confidence in the Company, its partners, NRG, as the Company’s principal stockholder (on a combined voting basis) and manager under the Management Services Agreement, and the regional wholesale power markets;	
 	 	
•	the Company’s financial performance and the financial performance of the Company subsidiaries;	
 	 	
•	the Company’s level of indebtedness and compliance with covenants in debt agreements;	
 	 	
•	maintenance of acceptable project credit ratings or credit quality;	
 	 	
•	cash flow; and	
 	 	
•	provisions of tax and securities laws that may impact raising capital.	
The Company may not be successful in obtaining additional capital for these or other reasons. Furthermore, the Company may be unable to refinance or replace project-level financing arrangements or other credit facilities on favorable terms or at all upon the expiration or termination thereof. The Company's failure, or the failure of any of the Company’s projects, to obtain additional capital or enter into new or replacement financing arrangements when due may constitute a default under such existing indebtedness and may have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.
Certain of the Company's long-term bilateral contracts result from state-mandated procurements and could be declared invalid by a court of competent jurisdiction.
A significant portion of the Company's revenues are derived from long-term bilateral contracts with utilities that are regulated by their respective states, and have been entered into pursuant to certain state programs. Certain long-term contracts that other companies have with state-regulated utilities have been challenged in federal court and have been declared unconstitutional on the grounds that the rate for energy and capacity established by the contracts impermissibly conflicts with the rate for energy and capacity established by FERC pursuant to the FPA. To date, federal district courts in New Jersey and Maryland have struck down contracts on similar grounds, and the U.S. Courts of Appeals for the Third and Fourth Circuits, respectively, have affirmed the lower court decisions. On October 19, 2015, the U.S. Supreme Court granted certiorari in the Fourth Circuit case, and the Court heard oral argument on February 24, 2016. The outcome of this litigation could affect future capacity prices

16

                        

in PJM, as well as the legal status of the Company's bilateral contracts with state-regulated utilities. If certain of the Company's state-mandated agreements with utilities are held to be invalid, the Company may be unable to replace such contracts, which could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.
The generation of electric energy from solar and wind energy sources depends heavily on suitable meteorological conditions.
If solar or wind conditions are unfavorable, the Company's electricity generation and revenue from renewable generation facilities may be substantially below the Company's expectations. The electricity produced and revenues generated by a solar electric or wind energy generation facility is highly dependent on suitable solar or wind conditions, as applicable, and associated weather conditions, which are beyond the Company's control. Furthermore, components of the Company's systems, such as solar panels and inverters, could be damaged by severe weather, such as hailstorms or tornadoes. In addition, replacement and spare parts for key components may be difficult or costly to acquire or may be unavailable. Unfavorable weather and atmospheric conditions could impair the effectiveness of the Company's assets or reduce their output beneath their rated capacity or require shutdown of key equipment, impeding operation of the Company's renewable assets. In addition, climate change may have the long-term effect of changing wind patterns at our projects. Changing wind patterns could cause changes in expected electricity generation. These events could also degrade equipment or components and the interconnection and transmission facilities’ lives or maintenance costs.
Although the Company bases its investment decisions with respect to each renewable generation facility on the findings of related wind and solar studies conducted on-site prior to construction or based on historical conditions at existing facilities, actual climatic conditions at a facility site, particularly wind conditions, may not conform to the findings of these studies and may be affected by variations in weather patterns, including any potential impact of climate change. Therefore, the Company's solar and wind energy facilities may not meet anticipated production levels or the rated capacity of the Company's generation assets, which could adversely affect the business, financial condition and results of operations and cash flows.
Operation of electric generation facilities involves significant risks and hazards customary to the power industry that could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.
The ongoing operation of the Company's facilities involves risks that include the breakdown or failure of equipment or processes or performance below expected levels of output or efficiency due to wear and tear, latent defect, design error or operator error or force majeure events, among other things. Operation of the Company's facilities also involves risks that the Company will be unable to transport its products to its customers in an efficient manner due to a lack of transmission capacity. Unplanned outages of generating units, including extensions of scheduled outages due to mechanical failures or other problems, occur from time to time and are an inherent risk of the business. Unplanned outages typically increase operation and maintenance expenses and may reduce revenues as a result of selling fewer MWh or require the Company to incur significant costs as a result of obtaining replacement power from third parties in the open market to satisfy forward power sales obligations. The Company's inability to operate its electric generation assets efficiently, manage capital expenditures and costs and generate earnings and cash flow from the Company's asset-based businesses could have a material adverse effect on the business, financial condition, results of operations and cash flows. While the Company maintains insurance, obtains warranties from vendors and obligates contractors to meet certain performance levels, the proceeds of such insurance, warranties or performance guarantees may not cover the Company's lost revenues, increased expenses or liquidated damages payments should it experience equipment breakdown or non-performance by contractors or vendors.
Power generation involves hazardous activities, including acquiring, transporting and unloading fuel, operating large pieces of rotating equipment and delivering electricity to transmission and distribution systems.
In addition to natural risks such as earthquake, flood, lightning, hurricane and wind, other hazards, such as fire, explosion, structural collapse and machinery failure are inherent risks in the Company's operations. These and other hazards can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment and contamination of, or damage to, the environment and suspension of operations. The occurrence of any one of these events may result in the Company being named as a defendant in lawsuits asserting claims for substantial damages, including for environmental cleanup costs, personal injury and property damage and fines and/or penalties. The Company maintains an amount of insurance protection that it considers adequate but cannot provide any assurance that the Company's insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which the Company may be subject. Furthermore, the Company's insurance coverage is subject to deductibles, caps, exclusions and other limitations. A loss for which the Company is not fully insured (which may include a significant judgment against any facility or facility operator) could have a material adverse effect on the Company's business, financial condition, results of operations or cash flows. Further, due to rising insurance costs and changes in the insurance markets, the Company cannot provide any assurance that its insurance coverage will continue to be available at all or at rates or on terms similar to those presently available. Any losses not covered by insurance could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.

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Maintenance, expansion and refurbishment of electric generation facilities involve significant risks that could result in unplanned power outages or reduced output.
The Company's facilities may require periodic upgrading and improvement. Any unexpected operational or mechanical failure, including failure associated with breakdowns and forced outages, could reduce the Company's facilities' generating capacity below expected levels, reducing the Company's revenues and jeopardizing the Company's ability to pay dividends to holders of its common stock at expected levels or at all. Degradation of the performance of the Company's solar facilities above levels provided for in the related offtake agreements may also reduce the Company's revenues. Unanticipated capital expenditures associated with maintaining, upgrading or repairing the Company's facilities may also reduce profitability.
If the Company makes any major modifications to its conventional power generation facilities, it may be required to install the best available control technology or to achieve the lowest achievable emission rates as such terms are defined under the new source review provisions of the CAA in the future. Any such modifications could likely result in substantial additional capital expenditures. The Company may also choose to repower, refurbish or upgrade its facilities based on its assessment that such activity will provide adequate financial returns. Such facilities require time for development and capital expenditures before commencement of commercial operations, and key assumptions underpinning a decision to make such an investment may prove incorrect, including assumptions regarding construction costs, timing, available financing and future fuel and power prices. These events could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.
Counterparties to the Company's offtake agreements may not fulfill their obligations and, as the contracts expire, the Company may not be able to replace them with agreements on similar terms in light of increasing competition in the markets in which the Company operates.
A significant portion of the electric power the Company generates is sold under long-term offtake agreements with public utilities or industrial or commercial end-users, with a weighted average remaining duration of approximately 14 years (based on net capacity under contract). As of December 31, 2015, the largest customers of the Company's power generation assets, including assets in which the Company has less than a 100% membership interest, were SCE and PG&E, which represented 46% and 23%, respectively, of the net electric generation capacity of the Company's facilities.
If, for any reason, any of the purchasers of power under these agreements are unable or unwilling to fulfill their related contractual obligations or if they refuse to accept delivery of power delivered thereunder or if they otherwise terminate such agreements prior to the expiration thereof, the Company's assets, liabilities, business, financial condition, results of operations and cash flows could be materially and adversely affected. Furthermore, to the extent any of the Company's power purchasers are, or are controlled by, governmental entities, the Company's facilities may be subject to legislative or other political action that may impair their contractual performance.
The power generation industry is characterized by intense competition and the Company's electric generation assets encounter competition from utilities, industrial companies and other independent power producers, in particular with respect to uncontracted output. In recent years, there has been increasing competition among generators for offtake agreements and this has contributed to a reduction in electricity prices in certain markets characterized by excess supply above designated reserve margins. In light of these market conditions, the Company may not be able to replace an expiring or terminated agreement with an agreement on equivalent terms and conditions, including at prices that permit operation of the related facility on a profitable basis. In addition, the Company believes many of its competitors have well-established relationships with the Company's current and potential suppliers, lenders, customers and have extensive knowledge of its target markets. As a result, these competitors may be able to respond more quickly to evolving industry standards and changing customer requirements than the Company will be able to. Adoption of technology more advanced than the Company's could reduce its competitors' power production costs resulting in their having a lower cost structure than is achievable with the technologies currently employed by the Company and adversely affect its ability to compete for offtake agreement renewals. If the Company is unable to replace an expiring or terminated offtake agreement, the affected facility may temporarily or permanently cease operations. External events, such as a severe economic downturn, could also impair the ability of some counterparties to the Company's offtake agreements and other customer agreements to pay for energy and/or other products and services received.
The Company's inability to enter into new or replacement offtake agreements or to compete successfully against current and future competitors in the markets in which the Company operates could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.

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Certain of the Company's assets have previously or currently operate, wholly or partially, without long-term power sale agreements.
Certain of the Company's assets have previously or currently operate, wholly or partially, without long-term power sale agreements. The generation capacity of the Company’s Paxton thermal generation asset has been sold through May 2019 in the annual Base Residual Auction, or BRA, under the PJM-administered RPM. Capacity revenue beginning in June 2019 is not yet determined. This facility does not have an offtake agreement for energy sales and sells energy through NRG Power Marketing LLC, an NRG affiliate, into the bid-based auction market for energy administered by PJM based on economic dispatch of its unit. If the Company is unable to sell available capacity from the Paxton facility beginning in June 2019 through the BRA or one of the other RPM capacity auctions or is unable to enter into a offtake agreement or otherwise sell unallocated or unsold capacity at favorable terms, there may be a material adverse effect on the Company's business, financial condition, results of operations and cash flows.
A portion of the steam and chilled water produced by the Company's thermal assets is sold at regulated rates, and the revenue earned by the Company's GenConn assets is established each year in a rate case; accordingly, the profitability of these assets is dependent on regulatory approval.
Approximately 375 net MWt of capacity from certain of the Company's thermal assets are sold at rates approved by one or more federal or state regulatory commissions, including the Pennsylvania Public Utility Commission and the California Public Utilities Commission for the thermal assets. Similarly, the revenues related to approximately 380 MW of capacity from the GenConn assets are established each year by the Connecticut Public Utilities Regulatory Authority. While such regulatory oversight is generally premised on the recovery of prudently incurred costs and a reasonable rate of return on invested capital, the rates that the Company may charge, or the revenue that the Company may earn with respect to this capacity are subject to authorization of the applicable regulatory authorities. There can be no assurance that such regulatory authorities will consider all of the costs to have been prudently incurred or that the regulatory process by which rates or revenues are determined will always result in rates or revenues that achieve full recovery of costs or an adequate return on the Company's capital investments. While the Company's rates and revenues are generally established based on an analysis of costs incurred in a base year, the rates the Company is allowed to charge, and the revenues the Company is authorized to earn, may or may not match the costs at any given time. If the Company's costs are not adequately recovered through these regulatory processes, it could have a material adverse effect on the business, financial condition, results of operations and cash flows.
Supplier and/ or customer concentration at certain of the Company's facilities may expose the Company to significant financial credit or performance risks.
The Company often relies on a single contracted supplier or a small number of suppliers for the provision of fuel, transportation of fuel, equipment, technology and/or other services required for the operation of certain facilities. In addition, certain of the Company's suppliers provide long-term warranties with respect to the performance of their products or services. If any of these suppliers cannot perform under their agreements with the Company, or satisfy their related warranty obligations, the Company will need to utilize the marketplace to provide or repair these products and services. There can be no assurance that the marketplace can provide these products and services as, when and where required. The Company may not be able to enter into replacement agreements on favorable terms or at all. If the Company is unable to enter into replacement agreements to provide for fuel, equipment, technology and other required services, it would seek to purchase the related goods or services at market prices, exposing the Company to market price volatility and the risk that fuel and transportation may not be available during certain periods at any price. The Company may also be required to make significant capital contributions to remove, replace or redesign equipment that cannot be supported or maintained by replacement suppliers, which could have a material adverse effect on the business, financial condition, results of operations, credit support terms and cash flows.
In addition, potential or existing customers at the Company’s district energy centers and combined heat and power plants, or the Energy Centers, may opt for on-site systems in lieu of using the Company’s Energy Centers, either due to corporate policies regarding the allocation of capital, unique situations where an on-site system might in fact prove more efficient, because of previously committed capital in systems that are already on-site, or otherwise. At times, the Company relies on a single customer or a few customers to purchase all or a significant portion of a facility's output, in some cases under long-term agreements that account for a substantial percentage of the anticipated revenue from a given facility.
The failure of any supplier to fulfill its contractual obligations to the Company or the Company’s loss of potential or existing customers could have a material adverse effect on its financial results. Consequently, the financial performance of the Company's facilities is dependent on the credit quality of, and continued performance by, the Company's suppliers and vendors and the Company’s ability to solicit and retain customers.

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The Company currently owns, and in the future may acquire, certain assets in which the Company has limited control over management decisions and its interests in such assets may be subject to transfer or other related restrictions.
The Company has limited control over the operation of GenConn, Avenal, CVSR and Desert Sunlight because the Company beneficially owns 50%, 50%, 48.95% and 25%, respectively, of the membership interests in such assets. The Company may seek to acquire additional assets in which it owns less than a majority of the related membership interests in the future. In these investments, the Company will seek to exert a degree of influence with respect to the management and operation of assets in which it owns less than a majority of the membership interests by negotiating to obtain positions on management committees or to receive certain limited governance rights, such as rights to veto significant actions. However, the Company may not always succeed in such negotiations. The Company may be dependent on its co-venturers to operate such assets. The Company's co-venturers may not have the level of experience, technical expertise, human resources management and other attributes necessary to operate these assets optimally. In addition, conflicts of interest may arise in the future between the Company and its stockholders, on the one hand, and the Company's co-venturers, on the other hand, where the Company's co-venturers' business interests are inconsistent with the interests of the Company and its stockholders. Further, disagreements or disputes between the Company and its co-venturers could result in litigation, which could increase expenses and potentially limit the time and effort the Company's officers and directors are able to devote to the business.
The approval of co-venturers also may be required for the Company to receive distributions of funds from assets or to sell, pledge, transfer, assign or otherwise convey its interest in such assets, or for the Company to acquire NRG's interests in such co-ventures as an initial matter. Alternatively, the Company's co-venturers may have rights of first refusal or rights of first offer in the event of a proposed sale or transfer of the Company's interests in such assets. These restrictions may limit the price or interest level for interests in such assets, in the event the Company wants to sell such interests.
Furthermore, certain of the Company's facilities are operated by third-party operators, such as First Solar. To the extent that third-party operators do not fulfill their obligations to manage operations of the facilities or are not effective in doing so, the amount of CAFD may be adversely affected.
The Company's assets are exposed to risks inherent in the use of interest rate swaps and forward fuel purchase contracts and the Company may be exposed to additional risks in the future if it utilizes other derivative instruments.
The Company uses interest rate swaps to manage interest rate risk. In addition, the Company uses forward fuel purchase contracts to hedge its limited commodity exposure with respect to the Company's district energy assets. If the Company elects to enter into such commodity hedges, the related asset could recognize financial losses on these arrangements as a result of volatility in the market values of the underlying commodities or if a counterparty fails to perform under a contract. If actively quoted market prices and pricing information from external sources are not available, the valuation of these contracts would involve judgment or the use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these contracts. If the values of these financial contracts change in a manner that the Company does not anticipate, or if a counterparty fails to perform under a contract, it could harm the business, financial condition, results of operations and cash flows.
The Company's business is subject to restrictions resulting from environmental, health and safety laws and regulations.
The Company is subject to various federal, state and local environmental and health and safety laws and regulations. In addition, the Company may be held primarily or jointly and severally liable for costs relating to the investigation and clean-up of any property where there has been a release or threatened release of a hazardous regulated material as well as other affected properties, regardless of whether the Company knew of or caused the release. In addition to these costs, which are typically not limited by law or regulation and could exceed an affected property's value, the Company could be liable for certain other costs, including governmental fines and injuries to persons, property or natural resources. Further, some environmental laws provide for the creation of a lien on a contaminated site in favor of the government as security for damages and any costs the government incurs in connection with such contamination and associated clean-up. Although the Company generally requires its operators to undertake to indemnify it for environmental liabilities they cause, the amount of such liabilities could exceed the financial ability of the operator to indemnify the Company. The presence of contamination or the failure to remediate contamination may adversely affect the Company's ability to operate the business.
The Company does not own all of the land on which its power generation or thermal assets are located, which could result in disruption to its operations.
The Company does not own all of the land on which its power generation or thermal assets are located and the Company is, therefore, subject to the possibility of less desirable terms and increased costs to retain necessary land use if it does not have valid leases or rights-of-way or if such rights-of-way lapse or terminate. Although the Company has obtained rights to construct and operate these assets pursuant to related lease arrangements, the rights to conduct those activities are subject to certain exceptions,

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including the term of the lease arrangement. The Company is also at risk of condemnation on land it owns. The loss of these rights, through the Company's inability to renew right-of-way contracts, condemnation or otherwise, may adversely affect the Company's ability to operate its generation and thermal infrastructure assets.
The Company’s use and enjoyment of real property rights for its projects may be adversely affected by the rights of lienholders and leaseholders that are superior to those of the grantors of those real property rights to the Company.
 
Solar and wind projects generally are, and are likely to be, located on land occupied by the project pursuant to long-term easements and leases. The ownership interests in the land subject to these easements and leases may be subject to mortgages securing loans or other liens (such as tax liens) and other easement and lease rights of third parties (such as leases of oil or mineral rights) that were created prior to the project’s easements and leases. As a result, the project’s rights under these easements or leases may be subject, and subordinate, to the rights of those third parties. The Company performs title searches and obtains title insurance to protect itself against these risks. Such measures may, however, be inadequate to protect the Company against all risk of loss of its rights to use the land on which the wind projects are located, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

The electric generation business is subject to substantial governmental regulation and may be adversely affected by changes in laws or regulations, as well as liability under, or any future inability to comply with, existing or future regulations or other legal requirements.
The Company's electric generation business is subject to extensive U.S. federal, state and local laws and regulation. Compliance with the requirements under these various regulatory regimes may cause the Company to incur significant additional costs, and failure to comply with such requirements could result in the shutdown of the non-complying facility, the imposition of liens, fines, and/or civil or criminal liability. Public utilities under the FPA are required to obtain FERC acceptance of their rate schedules for wholesale sales of electric energy, capacity and ancillary services. Except for generating facilities within the footprint of ERCOT which are regulated by the PUCT, all of the Company’s assets make wholesale sales of electric energy, capacity and ancillary services in interstate commerce and are public utilities for purposes of the FPA, unless otherwise exempt from such status. FERC's orders that grant market-based rate authority to wholesale power marketers reserve the right to revoke or revise that authority if FERC subsequently determines that the seller can exercise market power in transmission or generation, create barriers to entry, or engage in abusive affiliate transactions. In addition, public utilities are subject to FERC reporting requirements that impose administrative burdens and that, if violated, can expose the company to criminal and civil penalties or other risks.
The Company's market-based sales will be subject to certain rules prohibiting manipulative or deceptive conduct, and if any of the Company's generating companies are deemed to have violated those rules, they will be subject to potential disgorgement of profits associated with the violation, penalties, suspension or revocation of market based rate authority. If such generating companies were to lose their market-based rate authority, such companies would be required to obtain FERC's acceptance of a cost-of-service rate schedule and could become subject to the significant accounting, record-keeping, and reporting requirements that are imposed on utilities with cost- based rate schedules. This could have a material adverse effect on the rates the Company is able to charge for power from its facilities.
Most of the Company's assets are operating as EWGs as defined under the PUHCA, or QFs as defined under the PURPA, as amended, and therefore are exempt from certain regulation under the PUHCA and the PURPA. If a facility fails to maintain its status as an EWG or a QF or there are legislative or regulatory changes revoking or limiting the exemptions to the PUHCA, then the Company may be subject to significant accounting, record-keeping, access to books and records and reporting requirements and failure to comply with such requirements could result in the imposition of penalties and additional compliance obligations.
Substantially all of the Company's generation assets are also subject to the reliability standards promulgated by the designated Electric Reliability Organization (currently the North American Electric Reliability Corporation, or NERC) and approved by FERC. If the Company fails to comply with the mandatory reliability standards, it could be subject to sanctions, including substantial monetary penalties and increased compliance obligations. The Company will also be affected by legislative and regulatory changes, as well as changes to market design, market rules, tariffs, cost allocations, and bidding rules that occur in the existing regional markets operated by RTOs or ISOs, such as PJM. The RTOs/ISOs that oversee most of the wholesale power markets impose, and in the future may continue to impose, mitigation, including price limitations, offer caps, non-performance penalties and other mechanisms to address some of the volatility and the potential exercise of market power in these markets. These types of price limitations and other regulatory mechanisms may have a material adverse effect on the profitability of the Company's generation facilities acquired in the future that sell energy, capacity and ancillary products into the wholesale power markets. The regulatory environment for electric generation has undergone significant changes in the last several years due to state and federal policies affecting wholesale competition and the creation of incentives for the addition of large amounts of new renewable generation and, in some cases, transmission assets. These changes are ongoing and the Company cannot predict the future design of the wholesale power markets or the ultimate effect that the changing regulatory environment will have on the

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Company's business. In addition, in some of these markets, interested parties have proposed to re-regulate the markets or require divestiture of electric generation assets by asset owners or operators to reduce their market share. Other proposals to re-regulate may be made and legislative or other attention to the electric power market restructuring process may delay or reverse the deregulation process. If competitive restructuring of the electric power markets is reversed, discontinued, or delayed, the Company's business prospects and financial results could be negatively impacted.
The Company is subject to environmental laws and regulations that impose extensive and increasingly stringent requirements on its operations, as well as potentially substantial liabilities arising out of environmental contamination.
The Company's assets are subject to numerous and significant federal, state and local laws, including statutes, regulations, guidelines, policies, directives and other requirements governing or relating to, among other things: protection of wildlife, including threatened and endangered species; air emissions; discharges into water; water use; the storage, handling, use, transportation and distribution of dangerous goods and hazardous, residual and other regulated materials, such as chemicals; the prevention of releases of hazardous materials into the environment; the prevention, presence and remediation of hazardous materials in soil and groundwater, both on and offsite; land use and zoning matters; and workers' health and safety matters. The Company's facilities could experience incidents, malfunctions and other unplanned events that could result in spills or emissions in excess of permitted levels and result in personal injury, penalties and property damage. As such, the operation of the Company's facilities carries an inherent risk of environmental, health and safety liabilities (including potential civil actions, compliance or remediation orders, fines and other penalties), and may result in the assets being involved from time to time in administrative and judicial proceedings relating to such matters. The Company has implemented environmental, health and safety management programs designed to continually improve environmental, health and safety performance. Environmental laws and regulations have generally become more stringent over time, and the Company expects this trend to continue. Significant costs may be incurred for capital expenditures under environmental programs to keep the assets compliant with such environmental laws and regulations. If it is not economical to make those expenditures, it may be necessary to retire or mothball facilities or restrict or modify the Company's operations to comply with more stringent standards. These environmental requirements and liabilities could have a material adverse effect on the business, financial condition, results of operations and cash flows.
Risks that are beyond the Company's control, including but not limited to acts of terrorism or related acts of war, natural disaster, hostile cyber intrusions or other catastrophic events, could have a material adverse effect on the business, financial condition, results of operations and cash flows.
The Company's generation facilities that were acquired or those that the Company otherwise acquires or constructs and the facilities of third parties on which they rely may be targets of terrorist activities, as well as events occurring in response to or in connection with them, that could cause environmental repercussions and/or result in full or partial disruption of the facilities ability to generate, transmit, transport or distribute electricity or natural gas. Strategic targets, such as energy-related facilities, may be at greater risk of future terrorist activities than other domestic targets. Hostile cyber intrusions, including those targeting information systems as well as electronic control systems used at the generating plants and for the related distribution systems, could severely disrupt business operations and result in loss of service to customers, as well as create significant expense to repair security breaches or system damage.
Furthermore, certain of the Company's power generation thermal assets are located in active earthquake zones in California and Arizona, and certain project companies and suppliers conduct their operations in the same region or in other locations that are susceptible to natural disasters. In addition, California and some of the locations where certain suppliers are located, from time to time, have experienced shortages of water, electric power and natural gas. The occurrence of a natural disaster, such as an earthquake, drought, flood or localized extended outages of critical utilities or transportation systems, or any critical resource shortages, affecting the Company or its suppliers, could cause a significant interruption in the business, damage or destroy the Company's facilities or those of its suppliers or the manufacturing equipment or inventory of the Company's suppliers. Any such terrorist acts, environmental repercussions or disruptions or natural disasters could result in a significant decrease in revenues or significant reconstruction or remediation costs, beyond what could be recovered through insurance policies, which could have a material adverse effect on the business, financial condition, results of operations and cash flows.
The operation of the Company’s businesses is subject to cyber-based security and integrity risk.
Numerous functions affecting the efficient operation of the Company’s businesses are dependent on the secure and reliable storage, processing and communication of electronic data and the use of sophisticated computer hardware and software systems. The operation of the Company's generating assets are reliant on cyber-based technologies and, therefore, subject to the risk that such systems could be the target of disruptive actions, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, or otherwise be compromised by unintentional events. As a result, operations could be interrupted, property could be damaged and sensitive customer information could be lost or stolen, causing the Company to incur significant losses of revenues, other substantial liabilities and damages, costs to replace or repair damaged equipment and

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damage to the Company's reputation. In addition, the Company may experience increased capital and operating costs to implement increased security for its cyber systems and generating assets.
Government regulations providing incentives for renewable generation could change at any time and such changes may negatively impact the Company's growth strategy.
The Company's growth strategy depends in part on government policies that support renewable generation and enhance the economic viability of owning renewable electric generation assets. Renewable generation assets currently benefit from various federal, state and local governmental incentives such as ITCs, cash grants in lieu of ITCs, loan guarantees, RPS, programs, modified accelerated cost-recovery system of depreciation and bonus depreciation. In December 2015, the U.S. Congress enacted an extension of the 30% solar ITC so that projects that begin construction in 2016 through 2019 will continue to qualify for the 30% ITC.  Projects beginning construction in 2020 and 2021 will be eligible for the ITC at the rates of 26% and 22%, respectively.  The same legislation also extended the 10-year wind PTC for wind projects that begin construction in years 2016 through 2019.  Wind projects that begin construction in the years 2017, 2018 and 2019 are eligible for PTC at 80%, 60% and 40% of the statutory rate per kWh, respectively.
Many states have adopted RPS programs mandating that a specified percentage of electricity sales come from eligible sources of renewable energy. However, the regulations that govern the RPS programs, including pricing incentives for renewable energy, or reasonableness guidelines for pricing that increase valuation compared to conventional power (such as a projected value for carbon reduction or consideration of avoided integration costs), may change. If the RPS requirements are reduced or eliminated, it could lead to fewer future power contracts or lead to lower prices for the sale of power in future power contracts, which could have a material adverse effect on the Company's future growth prospects. Such material adverse effects may result from decreased revenues, reduced economic returns on certain project company investments, increased financing costs, and/or difficulty obtaining financing. Furthermore, the ARRA included incentives to encourage investment in the renewable energy sector, such as cash grants in lieu of ITCs, bonus depreciation and expansion of the U.S. DOE loan guarantee program. It is uncertain what loan guarantees may be made by the U.S. DOE loan guarantee program in the future. In addition, the cash grant in lieu of ITCs program only applies to facilities that commenced construction prior to December 31, 2011, which commencement date may be determined in accordance with the safe harbor if more than 5% of the total cost of the eligible property was paid or incurred by December 31, 2011.
If the Company is unable to utilize various federal, state and local government incentives to acquire additional renewable assets in the future, or the terms of such incentives are revised in a manner that is less favorable to the Company, it may suffer a material adverse effect on the business, financial condition, results of operations and cash flows.
The Company relies on electric interconnection and transmission facilities that it does not own or control and that are subject to transmission constraints within a number of the Company's regions. If these facilities fail to provide the Company with adequate transmission capacity, it may be restricted in its ability to deliver electric power to its customers and may either incur additional costs or forego revenues.
The Company depends on electric interconnection and transmission facilities owned and operated by others to deliver the wholesale power it will sell from its electric generation assets to its customers. A failure or delay in the operation or development of these interconnection or transmission facilities or a significant increase in the cost of the development of such facilities could result in lost revenues. Such failures or delays could limit the amount of power the Company's operating facilities deliver or delay the completion of the Company's construction projects. Additionally, such failures, delays or increased costs could have a material adverse effect on the business, financial condition and results of operations. If a region's power transmission infrastructure is inadequate, the Company's recovery of wholesale costs and profits may be limited. If restrictive transmission price regulation is imposed, the transmission companies may not have a sufficient incentive to invest in expansion of transmission infrastructure. The Company also cannot predict whether interconnection and transmission facilities will be expanded in specific markets to accommodate competitive access to those markets. In addition, certain of the Company's operating facilities' generation of electricity may be curtailed without compensation due to transmission limitations or limitations on the electricity grid's ability to accommodate intermittent electricity generating sources, reducing the Company's revenues and impairing its ability to capitalize fully on a particular facility's generating potential. Such curtailments could have a material adverse effect on the business, financial condition, results of operations and cash flows. Furthermore, economic congestion on transmission networks in certain of the markets in which the Company operates may occur and the Company may be deemed responsible for congestion costs. If the Company were liable for such congestion costs, its financial results could be adversely affected.

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The Company's costs, results of operations, financial condition and cash flows could be adversely impacted by the disruption of the fuel supplies necessary to generate power at its conventional and thermal power generation facilities.
Delivery of fossil fuels to fuel the Company's conventional and thermal generation facilities is dependent upon the infrastructure (including natural gas pipelines) available to serve each such generation facility as well as upon the continuing financial viability of contractual counterparties. As a result, the Company is subject to the risks of disruptions or curtailments in the production of power at these generation facilities if a counterparty fails to perform or if there is a disruption in the fuel delivery infrastructure.
Risks Related to the Company's Relationship with NRG
NRG is the Company's controlling stockholder and exercises substantial influence over the Company. The Company is highly dependent on NRG.
NRG owns all of the Company's outstanding Class B and Class D common stock. The Company's outstanding Class B and Class D common stock is entitled to one vote per share and 1/100th of a vote per share, respectively. As a result of its ownership of the Class B and Class D common stock, NRG owns 55.1% of the combined voting power of the Company's common stock as of December 31, 2015. NRG has also expressed its intention to maintain a controlling interest in the Company. As a result of this ownership, NRG has a substantial influence on the Company's affairs and its voting power will constitute a large percentage of any quorum of the Company's stockholders voting on any matter requiring the approval of the Company's stockholders. Such matters include the election of directors, the adoption of amendments to the Company's second amended and restated certificate of incorporation and bylaws and approval of mergers or sale of all or substantially all of its assets. This concentration of ownership may also have the effect of delaying or preventing a change in control of the Company or discouraging others from making tender offers for the Company's shares. In addition, NRG has the right to appoint all of the Company's directors. NRG may cause corporate actions to be taken even if their interests conflict with the interests of the Company's other stockholders (including holders of the Company's Class A and Class C common stock).
Furthermore, the Company depends on the management and administration services provided by or under the direction of NRG under the Management Services Agreement. NRG personnel and support staff that provide services to the Company under the Management Services Agreement are not required to, and the Company does not expect that they will, have as their primary responsibility the management and administration of the Company or to act exclusively for the Company and the Management Services Agreement does not require any specific individuals to be provided by NRG. Under the Management Services Agreement, NRG has the discretion to determine which of its employees perform assignments required to be provided to the Company. Any failure to effectively manage the Company's operations or to implement its strategy could have a material adverse effect on the business, financial condition, results of operations and cash flows. The Management Services Agreement will continue in perpetuity, until terminated in accordance with its terms.
The Company also depends upon NRG for the provision of management, administration and certain other services at all of the Company's facilities and contracts with NRG, or its subsidiaries, to procure fuel and sell power for certain of its operating facilities. Any failure by NRG to perform its requirements under these arrangements or the failure by the Company to identify and contract with replacement service providers, if required, could adversely affect the operation of the Company's facilities and have a material adverse effect on the business, financial condition, results of operations and cash flows.
The Company may not be able to consummate future acquisitions from NRG.
The Company's ability to grow through acquisitions depends, in part, on NRG's ability to identify and present the Company with acquisition opportunities. NRG established the Company to hold and acquire a diversified suite of power generating assets in the U.S. and its territories. Although NRG has agreed to grant the Company a right of first offer with respect to certain power generation assets that NRG may elect to sell in the future, NRG is under no obligation to sell any such power generation assets or to accept any related offer from the Company. Furthermore, NRG has no obligation to source acquisition opportunities specifically for the Company. In addition, NRG has not agreed to commit any minimum level of dedicated resources for the pursuit of renewable power-related acquisitions. There are a number of factors which could materially and adversely impact the extent to which suitable acquisition opportunities are made available from NRG, including:
 	 	
•	the same professionals within NRG's organization that are involved in acquisitions that are suitable for the Company have responsibilities within NRG's broader asset management business, which may include sourcing acquisition opportunities for NRG. Limits on the availability of such individuals will likewise result in a limitation on the availability of acquisition opportunities for the Company; and	

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•	in addition to structural limitations, the question of whether a particular asset is suitable is highly subjective and is dependent on a number of factors including an assessment by NRG relating to the Company's liquidity position at the time, the risk profile of the opportunity and its fit with the balance of the Company's then current operations and other factors. If NRG determines that an opportunity is not suitable for the Company, it may still pursue such opportunity on its own behalf, or on behalf of another NRG affiliate.	
In making these determinations, NRG may be influenced by factors that result in a misalignment or conflict of interest.
The departure of some or all of NRG's employees could prevent the Company from achieving its objectives.
The Company depends on the diligence, skill and business contacts of NRG's professionals and the information and opportunities they generate during the normal course of their activities. Furthermore, approximately 27% of NRG's employees at the Company's generation plants are covered by collective bargaining agreements as of December 31, 2015. The Company's future success will depend on the continued service of these individuals, who are not obligated to remain employed with NRG, or otherwise successfully renegotiate their collective bargaining agreements when such agreements expire or otherwise terminate. NRG has experienced departures of key professionals and personnel in the past and may do so in the future, and the Company cannot predict the impact that any such departures will have on its ability to achieve its objectives. The Management Services Agreement does not require NRG to maintain the employment of any of its professionals or to cause any particular professional to provide services to the Company or on its behalf. The departure of a significant number of NRG's professionals or a material portion of the NRG employees who work at any of the Company's facilities for any reason, or the failure to appoint qualified or effective successors in the event of such departures, could have a material adverse effect on the Company's ability to achieve its objectives. The Management Services Agreement does not require NRG to maintain the employment of any of its professionals or to cause any particular professional to provide services to the Company or on its behalf.
The Company's organizational and ownership structure may create significant conflicts of interest that may be resolved in a manner that is not in the best interests of the Company or the best interests of holders of its Class A and Class C common stock and that may have a material adverse effect on the business, financial condition, results of operations and cash flows.
The Company's organizational and ownership structure involves a number of relationships that may give rise to certain conflicts of interest between the Company and holders of its Class A and Class C common stock, on the one hand, and NRG, on the other hand. Pursuant to the Management Services Agreement with NRG, each of the Company's executive officers are a shared NRG executive and devote his or her time to both the Company and NRG as needed to conduct the respective businesses. Although the Company's directors and executive officers owe fiduciary duties to the Company's stockholders, these shared NRG executives have fiduciary and other duties to NRG, which duties may be inconsistent with the Company's best interests and holders of the Company's Class A and Class C common stock. In addition, NRG and its representatives, agents and affiliates have access to the Company's confidential information. Although some of these persons are subject to confidentiality obligations pursuant to confidentiality agreements or implied duties of confidence, the Management Services Agreement does not contain general confidentiality provisions.
Additionally, all of the Company's executive officers continue to have economic interests in NRG and, accordingly, the benefit to NRG from a transaction between the Company and NRG will proportionately inure to their benefit as holders of economic interests in NRG. NRG is a related party under the applicable securities laws governing related party transactions and may have interests which differ from the Company's interests or those of holders of the Class A and Class C common stock, including with respect to the types of acquisitions made, the timing and amount of dividends by the Company, the reinvestment of returns generated by the Company's operations, the use of leverage when making acquisitions and the appointment of outside advisors and service providers. Any material transaction between the Company and NRG will be subject to the Company's related party transaction policy, which will require prior approval of such transaction by the Company's corporate committees. Those of the Company's executive officers who have economic interests in NRG may be conflicted when advising the Company's corporate committees or otherwise participating in the negotiation or approval of such transactions. These executive officers have significant project- and industry-specific expertise that could prove beneficial to the Company's decision-making process and the absence of such strategic guidance could have a material adverse effect on the corporate committees' ability to evaluate any such transaction. Furthermore, the creation of corporate committees and the Company's related party transaction approval policy may not insulate the Company from derivative claims related to related party transactions and the conflicts of interest described in this risk factor. Regardless of the merits of such claims, the Company may be required to expend significant management time and financial resources in the defense thereof. Additionally, to the extent the Company fails to appropriately deal with any such conflicts, it could negatively impact the Company's reputation and ability to raise additional funds and the willingness of counterparties to do business with the Company, all of which could have a material adverse effect on the business, financial condition, results of operations and cash flows.

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The Company may be unable or unwilling to terminate the Management Services Agreement.
The Management Services Agreement provides that the Company may terminate the agreement upon 30 days prior written notice to NRG upon the occurrence of any of the following: (i) NRG defaults in the performance or observance of any material term, condition or covenant contained therein in a manner that results in material harm to the Company and the default continues unremedied for a period of 30 days after written notice thereof is given to NRG; (ii) NRG engages in any act of fraud, misappropriation of funds or embezzlement that results in material harm to the Company; (iii) NRG is grossly negligent in the performance of its duties under the agreement and such negligence results in material harm to the Company; or (iv) upon the happening of certain events relating to the bankruptcy or insolvency of NRG. Furthermore, if the Company requests an amendment to the scope of services provided by NRG under the Management Services Agreement and is not able to agree with NRG as to a change to the service fee resulting from a change in the scope of services within 180 days of the request, the Company will be able to terminate the agreement upon 30 days prior notice to NRG. The Company will not be able to terminate the agreement for any other reason, including if NRG experiences a change of control, and the agreement continues in perpetuity, until terminated in accordance with its terms. If NRG's performance does not meet the expectations of investors, and the Company is unable to terminate the Management Services Agreement, the market price of the Class A and Class C common stock could suffer.
If NRG terminates the Management Services Agreement or defaults in the performance of its obligations under the agreement the Company may be unable to contract with a substitute service provider on similar terms, or at all.
The Company relies on NRG to provide it with management services under the Management Services Agreement and does not have executive or senior management personnel independent from NRG. The Management Services Agreement provides that NRG may terminate the agreement upon 180 days prior written notice of termination to the Company if it defaults in the performance or observance of any material term, condition or covenant contained in the agreement in a manner that results in material harm and the default continues unremedied for a period of 30 days after written notice of the breach is given. If NRG terminates the Management Services Agreement or defaults in the performance of its obligations under the agreement, the Company may be unable to contract with a substitute service provider on similar terms or at all, and the costs of substituting service providers may be substantial. In addition, in light of NRG's familiarity with the Company's assets, a substitute service provider may not be able to provide the same level of service due to lack of pre-existing synergies. If the Company cannot locate a service provider that is able to provide substantially similar services as NRG does under the Management Services Agreement on similar terms, it would likely have a material adverse effect on the business, financial condition, results of operation and cash flows.
The liability of NRG is limited under the Company's arrangements with it and the Company has agreed to indemnify NRG against claims that it may face in connection with such arrangements, which may lead it to assume greater risks when making decisions relating to the Company than it otherwise would if acting solely for its own account.
Under the Management Services Agreement, NRG does not assume any responsibility other than to provide or arrange for the provision of the services described in the Management Services Agreement in good faith. In addition, under the Management Services Agreement, the liability of NRG and its affiliates is limited to the fullest extent permitted by law to conduct involving bad faith, fraud, willful misconduct or gross negligence or, in the case of a criminal matter, action that was known to have been unlawful. In addition, the Company has agreed to indemnify NRG to the fullest extent permitted by law from and against any claims, liabilities, losses, damages, costs or expenses incurred by an indemnified person or threatened in connection with the Company's operations, investments and activities or in respect of or arising from the Management Services Agreement or the services provided by NRG, except to the extent that the claims, liabilities, losses, damages, costs or expenses are determined to have resulted from the conduct in respect of which such persons have liability as described above. These protections may result in NRG tolerating greater risks when making decisions than otherwise would be the case, including when determining whether to use leverage in connection with acquisitions. The indemnification arrangements to which NRG is a party may also give rise to legal claims for indemnification that are adverse to the Company and holders of its common stock.
Certain of the Company’s PPAs and project-level financing arrangements include provisions that would permit the counterparty to terminate the contract or accelerate maturity in the event NRG ceases to control or own, directly or indirectly, a majority of the Company.
 
Certain of the Company’s PPAs and project-level financing arrangements contain change in control provisions that provide the counterparty with a termination right or the ability to accelerate maturity in the event of a change of control of the Company without the counterparty's consent. These provisions are triggered in the event NRG ceases to own, directly or indirectly, capital stock representing more than 50% of the voting power of all of the Company’s capital stock outstanding on such date, or, in some cases, if NRG ceases to be the majority owner, directly or indirectly, of the applicable project subsidiary. As a result, if NRG ceases to control, or in some cases, own a majority of the Company, the counterparties could terminate such contracts or accelerate the maturity of such financing arrangements. The termination of any of the Company’s PPAs or the acceleration of the maturity of any of the Company’s project-level financing could have a material adverse effect on the Company’s business, financial condition,

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results of operations and cash flow.

The Company is a "controlled company," controlled by NRG, whose interest in the Company's business may be different from other holders of the Company's common stock.
              As of December 31, 2015, NRG controls 55.1% of the Company's combined voting power and is able to elect all of the Company's board of directors. As a result, the Company is considered a "controlled company" for the purposes of the NYSE listing requirements. As a "controlled company," the Company is permitted to, and the Company may, opt out of the NYSE listing requirements that would require (i) a majority of the members of the Company's board of directors to be independent, (ii) that the Company establish a compensation committee and a nominating and governance committee, each comprised entirely of independent directors, or (iii) that the compensation of the Company's executive officers and nominees for directors are determined or recommended to the Company's board of directors by the independent members of the Company's board of directors. The NYSE listing requirements are intended to ensure that directors who meet the independence standards are free of any conflicting interest that could influence their actions as directors. It is also possible that the interests of NRG may in some circumstances conflict with the Company's interests and the interests of the holders of the Company's Class A and Class C common stock.
Risks Inherent in an Investment in the Company
The Company may not be able to continue paying comparable or growing cash dividends to holders of its common stock in the future.
              The amount of CAFD principally depends upon the amount of cash the Company generates from its operations, which will fluctuate from quarter to quarter based on, among other things:
 	 	
•	the level and timing of capital expenditures the Company makes;	
 	 	
•	the level of operating and general and administrative expenses, including reimbursements to NRG for services provided to the Company in accordance with the Management Services Agreement;	
 	 	
•	variations in revenues generated by the business, due to seasonality or otherwise;	
 	 	
•	debt service requirements and other liabilities;	
 	 	
•	fluctuations in working capital needs;	
 	 	
•	the Company's ability to borrow funds and access capital markets;	
 	 	
•	restrictions contained in the Company's debt agreements (including project-level financing and, if applicable, corporate debt); and	
 	 	
•	other business risks affecting cash levels.	
              As a result of all these factors, the Company cannot guarantee that it will have sufficient cash generated from operations to pay a specific level of cash dividends to holders of its common stock. Furthermore, holders of the Company's common stock should be aware that the amount of CAFD depends primarily on cash flow, and is not solely a function of profitability, which is affected by non-cash items.
    The Company may incur other expenses or liabilities during a period that could significantly reduce or eliminate its CAFD and, in turn, impair its ability to pay dividends to holders of the Company's common stock during the period. Because the Company is a holding company, its ability to pay dividends on the Company's common stock is limited by restrictions on its ability to pay dividends and the ability of the Company's subsidiaries to make distributions to the Company, including restrictions under the terms of the agreements governing the Company's corporate debt and project-level financing. The project-level financing agreements generally prohibit distributions from the project entities prior to COD and thereafter prohibit distributions to the Company unless certain specific conditions are met, including the satisfaction of financial ratios. The Company's amended and restated revolving credit facility also restricts the Company's ability to declare and pay dividends if an event of default has occurred and is continuing or if the payment of the dividend would result in an event of default.

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              NRG Yield LLC's CAFD will likely fluctuate from quarter to quarter, in some cases significantly, due to seasonality. As a result, the Company may cause NRG Yield LLC to reduce the amount of cash it distributes to its members in a particular quarter to establish reserves to fund distributions to its members in future periods for which the cash distributions the Company would otherwise receive from NRG Yield LLC would otherwise be insufficient to fund its quarterly dividend. If the Company fails to cause NRG Yield LLC to establish sufficient reserves, the Company may not be able to maintain its quarterly dividend with respect to a quarter adversely affected by seasonality.
              Finally, dividends to holders of the Company's common stock will be paid at the discretion of the Company's board of directors. The Company's board of directors may decrease the level, or entirely discontinue payment, of dividends.
The Company is a holding company and its only material asset is its interest in NRG Yield LLC, and the Company is accordingly dependent upon distributions from NRG Yield LLC and its subsidiaries to pay dividends and taxes and other expenses.
              The Company is a holding company and has no material assets other than its ownership of membership interests in NRG Yield LLC, a holding company that has no material assets other than its interest in NRG Yield Operating LLC, whose sole material assets are the project companies. None of the Company, NRG Yield LLC or NRG Yield Operating LLC has any independent means of generating revenue. The Company intends to continue to cause NRG Yield Operating LLC's subsidiaries to make distributions to NRG Yield Operating LLC and, in turn, make distributions to NRG Yield LLC, and, in turn, to make distributions to the Company in an amount sufficient to cover all applicable taxes payable and dividends, if any, declared by the Company. To the extent that the Company needs funds for a quarterly cash dividend to holders of the Company's Class A and Class C common stock or otherwise, and NRG Yield Operating LLC or NRG Yield LLC is restricted from making such distributions under applicable law or regulation or is otherwise unable to provide such funds (including as a result of NRG Yield Operating LLC's operating subsidiaries being unable to make distributions), it could materially adversely affect the Company's liquidity and financial condition and limit the Company's ability to pay dividends to holders of the Company's Class A and Class C common stock.
The Company has a limited operating history and as a result there is no assurance the Company can operate on a profitable basis.
              The Company has a limited operating history on which to base an evaluation of its business and prospects. The Company's prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of operation. The Company cannot assure investors that it will be successful in addressing the risks the Company may encounter, and the Company's failure to do so could have a material adverse effect on its business, financial condition, results of operations and cash flows.
Market interest rates may have an effect on the value of the Company's Class A and Class C common stock.
              One of the factors that influences the price of shares of the Company's Class A and Class C common stock is the effective dividend yield of such shares (i.e., the yield as a percentage of the then market price of the Company's shares) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead investors of shares of the Company's Class A and Class C common stock to expect a higher dividend yield and the Company's inability to increase its dividend as a result of an increase in borrowing costs, insufficient CAFD or otherwise, could result in selling pressure on, and a decrease in the market prices of the Company's Class A and Class C common stock as investors seek alternative investments with higher yield.
If the Company is deemed to be an investment company, the Company may be required to institute burdensome compliance requirements and the Company's activities may be restricted, which may make it difficult for the Company to complete strategic acquisitions or effect combinations.
              If the Company is deemed to be an investment company under the Investment Company Act of 1940, or the Investment Company Act, the Company's business would be subject to applicable restrictions under the Investment Company Act, which could make it impracticable for the Company to continue its business as contemplated. The Company believes it is not an investment company under Section 3(b)(1) of the Investment Company Act because the Company is primarily engaged in a non-investment company business. The Company intends to conduct its operations so that the Company will not be deemed an investment company. However, if the Company were to be deemed an investment company, restrictions imposed by the Investment Company Act, including limitations on the Company's capital structure and the Company's ability to transact with affiliates, could make it impractical for the Company to continue its business as contemplated.

28

                        

Market volatility may affect the price of the Company's Class A and Class C common stock.
              The market price of the Company's Class A and Class C common stock may fluctuate significantly in response to a number of factors, most of which the Company cannot predict or control, including general market and economic conditions, disruptions, downgrades, credit events and perceived problems in the credit markets; actual or anticipated variations in its quarterly operating results or dividends; changes in the Company's investments or asset composition; write-downs or perceived credit or liquidity issues affecting the Company's assets; market perception of NRG, the Company's business and the Company's assets; the Company's level of indebtedness and/or adverse market reaction to any indebtedness that the Company may incur in the future; the Company's ability to raise capital on favorable terms or at all; loss of any major funding source; the termination of the Management Services Agreement or additions or departures of NRG's key personnel; changes in market valuations of similar power generation companies; and speculation in the press or investment community regarding the Company or NRG.
              Securities markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. Any broad market fluctuations may adversely affect the trading price of the Company's Class A and Class C common stock.
Current market conditions have increased certain of the risks the company faces. 
Conditions in the capital markets for growth, income and energy companies, including renewables companies, generally deteriorated in 2015.  In some cases, these developments have affected the plans and perspectives of various market participants, including operating entities, consumers and financing providers, and have increased uncertainty and heightened some of the risks the Company faces.  The Company and other companies have adjusted their plans and priorities in light of these developments.

                Risks that have increased as a result of these developments include, but are not limited to, risks related to access to capital and liquidity and risks related to the performance of third parties, including NRG.   The Company has significant relationships with, and in certain areas depends significantly on, NRG.  In particular, NRG provides management and operational services and other support.  The Company’s growth strategy depends on its ability to identify and acquire additional facilities from NRG and unaffiliated third parties.  The Company interacts with or depends on NRG for many third-party acquisition opportunities and for operations and maintenance support on various pending and completed transactions.  As a result, the Company’s financial and operating performance and prospects, including the Company’s ability to grow its dividend per share, may be affected by the performance, prospects, and priorities of NRG, and material adverse developments at NRG or changes in its strategic priorities may materially affect our business, financial condition and results of operations.

Furthermore, any significant disruption to the Company’s ability to access the capital markets, or a significant increase in interest rates, could make it difficult for the Company to successfully acquire attractive projects from 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 the Company’s project portfolio may be limited, which could have a material adverse effect on the Company’s ability to implement its growth strategy and, ultimately, its business, financial condition, results of operations and cash flows.

Provisions of the Company's charter documents or Delaware law could delay or prevent an acquisition of the Company, even if the acquisition would be beneficial to holders of the Company's Class A and Class C common stock, and could make it more difficult to change management.
              Provisions of the Company's second amended and restated certificate of incorporation and bylaws may discourage, delay or prevent a merger, acquisition or other change in control that holders of the Company's Class A and Class C common stock may consider favorable, including transactions in which such stockholders might otherwise receive a premium for their shares. This is because these provisions may prevent or frustrate attempts by stockholders to replace or remove members of the Company's management. These provisions include:
 	 	
•	a prohibition on stockholder action through written consent;	
 	 	
•	a requirement that special meetings of stockholders be called upon a resolution approved by a majority of the Company's directors then in office;	
 	 	
•	advance notice requirements for stockholder proposals and nominations; and	
 	 	
•	the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine.	

29

                        

              Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person that together with its affiliates owns or within the last three years has owned 15% of voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.  Additionally, the Company's second amended and restated certificate of incorporation prohibits any person and any of its associate or affiliate companies in the aggregate, public utility or holding company from acquiring, other than secondary market transactions, an amount of the Company's Class A or Class C common stock sufficient to result in a transfer of control without the prior written consent of the Company's board of directors. Any such change of control, in addition to prior approval from the Company's board of directors, would require prior authorization from FERC. Similar restrictions may apply to certain purchasers of the Company's securities which are holding companies regardless of whether the Company's securities are purchased in offerings by the Company or NRG, in open market transactions or otherwise. A purchaser of the Company's securities which is a holding company will need to determine whether a given purchase of the Company's securities may require prior FERC approval.
Investors may experience dilution of ownership interest due to the future issuance of additional shares of the Company's Class A or Class C common stock.
              The Company is in a capital intensive business, and may not have sufficient funds to finance the growth of the Company's business, future acquisitions or to support the Company's projected capital expenditures. As a result, the Company may require additional funds from further equity or debt financings, including tax equity financing transactions or sales of preferred shares or convertible debt to complete future acquisitions, expansions and capital expenditures and pay the general and administrative costs of the Company's business. In the future, the Company may issue the Company's previously authorized and unissued securities, resulting in the dilution of the ownership interests of purchasers of the Company's Class A and Class C common stock. Under the Company's second amended and restated certificate of incorporation, the Company is authorized to issue 500,000,000 shares of Class A common stock, 500,000,000 shares of Class B common stock, 1,000,000,000 shares of Class C common stock, 1,000,000,000 shares of Class D common stock and 10,000,000 shares of preferred stock with preferences and rights as determined by the Company's board of directors. The potential issuance of additional shares of common stock or preferred stock or convertible debt may create downward pressure on the trading price of the Company's Class A and Class C common stock.
If securities or industry analysts do not publish or cease publishing research or reports about the Company, the Company's business or the Company's market, or if they change their recommendations regarding the Company's Class A and/or Class C common stock adversely, the stock price and trading volume of the Company's Class A and/or Class C common stock could decline.
              The trading market for the Company's Class A and Class C common stock is influenced by the research and reports that industry or securities analysts may publish about the Company, the Company's business, the Company's market or the Company's competitors. If any of the analysts who may cover the Company change their recommendation regarding the Company's Class A and/or Class C common stock adversely, or provide more favorable relative recommendations about the Company's competitors, the price of the Company's Class A and/or Class C common stock would likely decline. If any analyst who covers the Company were to cease coverage of the Company or fail to regularly publish reports on the Company, the Company could lose visibility in the financial markets, which in turn could cause the stock price or trading volume of the Company's Class A and/or Class C common stock to decline.
Future sales of the Company's Class A or Class C common stock by NRG may cause the price of the Company's Class A or Class C common stock to fall.
The market price of the Company's Class A or Class C common stock could decline as a result of sales by NRG of such shares (issuable to NRG upon the exchange of some or all of its NRG Yield LLC Class B or Class D units, respectively) in the market, or the perception that these sales could occur.
               The market price of the Company's Class A or Class C common stock may also decline as a result of NRG disposing or transferring some or all of the Company's outstanding Class B or Class D common stock, which disposals or transfers would reduce NRG's ownership interest in, and voting control over, the Company. These sales might also make it more difficult for the Company to sell equity securities at a time and price that the Company deems appropriate. NRG and certain of its affiliates have certain demand and piggyback registration rights with respect to shares of the Company's Class A common stock issuable upon the exchange of NRG Yield LLC's Class B units and/or Class C common stock issuable upon the exchange of NRG Yield LLC's Class D units. The presence of additional shares of the Company's Class A and/or Class C common stock trading in the public market, as a result of the exercise of such registration rights, may have a material adverse effect on the market price of the Company's securities.

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Risks Related to Taxation
The Company's future tax liability may be greater than expected if the Company does not generate NOLs sufficient to offset taxable income, if federal, state and local tax authorities challenge certain of the Company’s tax positions and exemptions or if changes in federal, state and local tax regulations occur.
              The Company expects to generate NOLs and carryforward prior year NOL balances to offset future taxable income. Based on the Company's current portfolio of assets, which include renewable assets that benefit from accelerated tax depreciation deductions, the Company does not expect to pay significant federal income tax for a period of approximately nine years. While the Company expects these losses will be available as a future benefit, in the event that they are not generated as expected, successfully challenged by the IRS or state and local jurisdictions (in a tax audit or otherwise) or subject to future limitations from a potential change in ownership as discussed below, the Company's ability to realize these benefits may be limited. In addition, the Company’s ability to realize state and local tax exemptions, including property or sales and use tax exemptions, is subject to various tax laws. If these exemptions are successfully challenged by state and local jurisdictions or if a change in tax law occurs, the Company’s ability to realize these exemptions could be affected. A reduction in the Company's expected NOLs, a limitation on the Company's ability to use such losses or tax credits, and challenges by tax authorities to the Company’s tax positions may result in a material increase in the Company's estimated future income tax liability and may negatively impact the Company's liquidity and financial condition.
The Company's ability to use NOLs to offset future income may be limited.
              The Company's ability to use NOLs could be substantially limited if the Company were to experience an "ownership change" as defined under Section 382 of the Code. In general, an "ownership change" would occur if the Company's "5-percent shareholders," as defined under Section 382 of the Code, collectively increased their ownership in the Company by more than 50 percentage points over a rolling three-year period. A corporation that experiences an ownership change will generally be subject to an annual limitation on the use of its pre-ownership change deferred tax assets equal to the equity value of the corporation immediately before the ownership change, multiplied by the long-term tax-exempt rate for the month in which the ownership change occurs. Future sales of any class of the Company's common stock by NRG, as well as future issuances by the Company, could contribute to a potential ownership change.
A valuation allowance may be required for the Company's deferred tax assets.
                 The Company's expected NOLs and tax credits will be reflected as a deferred tax asset as they are generated until utilized to offset income. Valuation allowances may need to be maintained for deferred tax assets that the Company estimates are more likely than not to be unrealizable, based on available evidence at the time the estimate is made. Valuation allowances related to deferred tax assets can be affected by changes to tax laws, statutory tax rates and future taxable income levels. In the event that the Company was to determine that it would not be able to realize all or a portion of the net deferred tax assets in the future, the Company would reduce such amounts through a charge to income tax expense in the period in which that determination was made, which could have a material adverse impact on the Company's financial condition and results of operations.
Distributions to holders of the Company's Class A and Class C common stock may be taxable.               
The amount of distributions that will be treated as taxable for U.S. federal income tax purposes will depend on the amount of the Company's current and accumulated earnings and profits. It is difficult to predict whether the Company will generate earnings or profits as computed for federal income tax purposes in any given tax year. Generally, a corporation's earnings and profits are computed based upon taxable income, with certain specified adjustments. Distributions will constitute ordinary dividend income to the extent paid from the Company's current or accumulated earnings and profits, and a nontaxable return of capital to the extent of a stockholder's basis in his or her Class A or Class C common stock. Distributions in excess of the Company's current and accumulated earnings and profits and in excess of a stockholder's basis will be treated as gain from the sale of the common stock. 
For U.S. tax purposes, NRG Yield, Inc.'s 2015 distributions to its shareholders are classified for U.S. federal income tax purposes as a nontaxable return of capital and reduction of a U.S. shareholder's tax basis, to the extent of a U.S. shareholder's tax basis in each of its NRG Yield, Inc’s common shares, with any remaining amount being taxed as capital gain.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K of NRG Yield, Inc., together with its consolidated subsidiaries, or the Company, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words "believes," "projects," "anticipates," "plans," "expects," "intends," "estimates" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors, risks and uncertainties include the factors described under Item 1A —  Risk Factors  and the following:
 	 	
•	The Company's ability to maintain and grow its quarterly dividend;	
 	 	
•	The Company's ability to successfully identify, evaluate and consummate acquisitions from third parties;	
 	 	
•	The Company's ability to acquire assets from NRG;	
 	 	
•	The Company's ability to raise additional capital due to its indebtedness, corporate structure, market conditions or otherwise;	
 	 	
•	Hazards customary to the power production industry and power generation operations such as fuel and electricity price volatility, unusual weather conditions, catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to fuel supply costs or availability due to higher demand, shortages, transportation problems or other developments, environmental incidents, or electric transmission or gas pipeline system constraints and the possibility that the Company may not have adequate insurance to cover losses as a result of such hazards;	
 	 	
•	The Company's ability to operate its businesses efficiently, manage maintenance capital expenditures and costs effectively, and generate earnings and cash flows from its asset-based businesses in relation to its debt and other obligations;	
 	 	
•	The willingness and ability of counterparties to the Company's offtake agreements to fulfill their obligations under such agreements;	
 	 	
•	The Company's ability to enter into contracts to sell power and procure fuel on acceptable terms and prices as current offtake agreements expire;	
 	 	
•	Government regulation, including compliance with regulatory requirements and changes in market rules, rates, tariffs and environmental laws;	
 	 	
•	Changes in law, including judicial decisions;	
 	 	
•	The Company's ability to receive anticipated cash grants with respect to certain renewable (wind and solar) assets;	
 	 	
•	Operating and financial restrictions placed on the Company and its subsidiaries that are contained in the project-level debt facilities and other agreements of certain subsidiaries and project-level subsidiaries generally, in the NRG Yield Operating LLC amended and restated revolving credit facility, in the indenture governing the Senior Notes and in the indentures governing the Company's convertible notes; and	
 	 	
•	The Company's ability to borrow additional funds and access capital markets, as well as the Company's substantial indebtedness and the possibility that the Company may incur additional indebtedness going forward.	
Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause the Company's actual results to differ materially from those contemplated in any forward-looking statements included in this Annual Report on Form 10-K should not be construed as exhaustive.

Item 1B — Unresolved Staff Comments
None.

32

                        

Item 2 — Properties
Listed below are descriptions of the Company's interests in facilities, operations and/or projects owned or leased as of December 31, 2015.

 	 	 	 	Capacity	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Rated MW	 	Net MW (a)	 	Ownership	 	 	 	 	 	PPA Terms	 	
Assets	 	Location	 	 	 	 	 	 	 	Fuel	 	COD	 	Counterparty	 	Expiration	 	 	 	 	 	 	
Conventional	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
El Segundo	 	El Segundo, CA	 	550	
 	 	550	
 	 	100	%	 	Natural Gas	 	August 2013	 	Southern California Edison	 	2023	 	 	 	 	 	 	
GenConn Devon  (b)	 	Milford, CT	 	190	
 	 	95	
 	 	50	%	 	Natural Gas/Oil	 	June 2010	 	Connecticut Light & Power	 	2040	 	 	 	 	 	 	
GenConn Middletown  (b)	 	Middletown, CT	 	190	
 	 	95	
 	 	50	%	 	Natural Gas/Oil	 	June 2011	 	Connecticut Light & Power	 	2041	 	 	 	 	 	 	
Marsh Landing	 	Antioch, CA	 	720	
 	 	720	
 	 	100	%	 	Natural Gas	 	May 2013	 	Pacific Gas and Electric	 	2023	 	 	 	 	 	 	
Walnut Creek	 	City of Industry, CA	 	485	
 	 	485	
 	 	100	%	 	Natural Gas	 	May 2013	 	Southern California Edison	 	2023	 	 	 	 	 	 	
Total Conventional	 	2,135	
 	 	1,945	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Utility Scale Solar	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Alpine	 	Lancaster, CA	 	66	
 	 	66	
 	 	100	%	 	Solar	 	January 2013	 	Pacific Gas and Electric	 	2033	 	 	 	 	 	 	
Avenal (b)	 	Avenal, CA	 	45	
 	 	23	
 	 	50	%	 	Solar	 	August 2011	 	Pacific Gas and Electric	 	2031	 	 	 	 	 	 	
Avra Valley	 	Pima County, AZ	 	26	
 	 	26	
 	 	100	%	 	Solar	 	December 2012	 	Tucson Electric Power	 	2032	 	 	 	 	 	 	
Blythe	 	Blythe, CA	 	21	
 	 	21	
 	 	100	%	 	Solar	 	December 2009	 	Southern California Edison	 	2029	 	 	 	 	 	 	
Borrego	 	Borrego Springs, CA	 	26	
 	 	26	
 	 	100	%	 	Solar	 	February 2013	 	San Diego Gas and Electric	 	2038	 	 	 	 	 	 	
CVSR	 	San Luis Obispo, CA	 	250	
 	 	122	
 	 	48.95	%	 	Solar	 	October 2013	 	Pacific Gas and Electric	 	2038	 	 	 	 	 	 	
Desert Sunlight 250	 	Desert Center, California	 	250	
 	 	63	
 	 	25	%	 	Solar	 	December 2013	 	Southern California Edison	 	2035	 	 	 	 	 	 	
Desert Sunlight 300	 	Desert Center, California	 	300	
 	 	75	
 	 	25	%	 	Solar	 	December 2013	 	Pacific Gas and Electric	 	2040	 	 	 	 	 	 	
Kansas South	 	Lemoore, CA	 	20	
 	 	20	
 	 	100	%	 	Solar	 	June 2013	 	Pacific Gas and Electric	 	2033	 	 	 	 	 	 	
Roadrunner	 	Santa Teresa, NM	 	20	
 	 	20	
 	 	100	%	 	Solar	 	August 2011	 	El Paso Electric	 	2031	 	 	 	 	 	 	
TA High Desert	 	Lancaster, CA	 	20	
 	 	20	
 	 	100	%	 	Solar	 	March 2013	 	Southern California Edison	 	2033	 	 	 	 	 	 	
Total Utility Scale Solar	 	1,044	
 	 	482	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Distributed Solar	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
AZ DG Solar Projects	 	AZ	 	5	
 	 	5	
 	 	100	%	 	Solar	 	December 2010 - January 2013	 	Various	 	2025 - 2033	 	 	 	 	 	 	
PFMG DG Solar Projects	 	CA	 	9	
 	 	4	
 	 	51	%	 	Solar	 	October 2012 - December 2012	 	Various	 	2032	 	 	 	 	 	 	
Total Distributed Solar	 	14	
 	 	9	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Wind	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Alta I	 	Tehachapi, CA	 	150	
 	 	150	
 	 	100	%	 	Wind	 	December 2010	 	Southern California Edison	 	2035	 	 	 	 	 	 	
Alta II	 	Tehachapi, CA	 	150	
 	 	150	
 	 	100	%	 	Wind	 	December 2010	 	Southern California Edison	 	2035	 	 	 	 	 	 	
Alta III	 	Tehachapi, CA	 	150	
 	 	150	
 	 	100	%	 	Wind	 	February 2011	 	Southern California Edison	 	2035	 	 	 	 	 	 	
Alta IV	 	Tehachapi, CA	 	102	
 	 	102	
 	 	100	%	 	Wind	 	March 2011	 	Southern California Edison	 	2035	 	 	 	 	 	 	
Alta V	 	Tehachapi, CA	 	168	
 	 	168	
 	 	100	%	 	Wind	 	April 2011	 	Southern California Edison	 	2035	 	 	 	 	 	 	
Alta X (c)(d)	 	Tehachapi, CA	 	137	
 	 	137	
 	 	100	%	 	Wind	 	February 2014	 	Southern California Edison	 	2038	 	 	 	 	 	 	

33

                        

 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Capacity	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Rated MW	 	Net MW	 	Ownership	 	 	 	 	 	PPA Terms	 	
Assets	 	Location	 	 	 	 	 	 	 	Fuel	 	COD	 	Counterparty	 	Expiration	 	 	 	 	 	 	
Alta XI (c)(d)	 	Tehachapi, CA	 	90	
 	 	90	
 	 	100	%	 	Wind	 	February 2014	 	Southern California Edison	 	2038	 	 	 	 	 	 	
Buffalo Bear	 	Buffalo, OK	 	19	
 	 	19	
 	 	100	%	 	Wind	 	December 2008	 	Western Farmers Electric Co-operative	 	2033	 	 	 	 	 	 	
Crosswinds	 	Ayrshire, IA	 	21	
 	 	16	
 	 	74.3	%	 	Wind	 	June 2007	 	Corn Belt Power Cooperative	 	2027	 	 	 	 	 	 	
Elbow Creek	 	Howard County, TX	 	122	
 	 	92	
 	 	75	%	 	Wind	 	December 2008	 	NRG Power Marketing LLC	 	2022	 	 	 	 	 	 	
Elkhorn Ridge	 	Bloomfield, NE	 	54	
 	 	41	
 	 	50.3	%	 	Wind	 	March 2009	 	Nebraska Public Power District	 	2029	 	 	 	 	 	 	
Forward	 	Berlin, PA	 	29	
 	 	22	
 	 	75	%	 	Wind	 	April 2008	 	Constellation NewEnergy, Inc.	 	2017	 	 	 	 	 	 	
Goat Wind	 	Sterling City, TX	 	150	
 	 	113	
 	 	74.9	%	 	Wind	 	April 2008/June 2009	 	Dow Pipeline Company	 	2025	 	 	 	 	 	 	
Hardin	 	Jefferson, IA	 	15	
 	 	11	
 	 	74.3	%	 	Wind	 	May 2007	 	Interstate Power and Light Company	 	2027	 	 	 	 	 	 	
Laredo Ridge	 	Petersburg, NE	 	80	
 	 	80	
 	 	100	%	 	Wind	 	February 2011	 	Nebraska Public Power District	 	2031	 	 	 	 	 	 	
Lookout	 	Berlin, PA	 	38	
 	 	29	
 	 	75	%	 	Wind	 	October 2008	 	Southern Maryland Electric Cooperative	 	2030	 	 	 	 	 	 	
Odin	 	Odin, MN	 	20	
 	 	15	
 	 	74.9	%	 	Wind	 	June 2008	 	Missouri River Energy Services	 	2028	 	 	 	 	 	 	
Pinnacle	 	Keyser, WV	 	55	
 	 	55	
 	 	100	%	 	Wind	 	December 2011	 	Maryland Department of General Services and University System of Maryland	 	2031	 	 	 	 	 	 	
San Juan Mesa	 	Elida, NM	 	90	
 	 	68	
 	 	56.3	%	 	Wind	 	December 2005	 	Southwestern Public Service Company	 	2025	 	 	 	 	 	 	
Sleeping Bear	 	Woodward, OK	 	95	
 	 	71	
 	 	75	%	 	Wind	 	October 2007	 	Public Service Company of Oklahoma	 	2032	 	 	 	 	 	 	
South Trent	 	Sweetwater, TX	 	101	
 	 	101	
 	 	100	%	 	Wind	 	January 2009	 	AEP Energy Partners	 	2029	 	 	 	 	 	 	
Spanish Fork	 	Spanish Fork, UT	 	19	
 	 	14	
 	 	75	%	 	Wind	 	July 2008	 	PacifiCorp	 	2028	 	 	 	 	 	 	
Spring Canyon II  (c)	 	Logan County, CO	 	32	
 	 	29	
 	 	90.1	%	 	Wind	 	October 2014	 	Platte River Power Authority	 	2039	 	 	 	 	 	 	
Spring Canyon III  (c)	 	Logan County, CO	 	28	
 	 	25	
 	 	90.1	%	 	Wind	 	December 2014	 	Platte River Power Authority	 	2039	 	 	 	 	 	 	
Taloga	 	Putnam, OK	 	130	
 	 	130	
 	 	100	%	 	Wind	 	July 2011	 	Oklahoma Gas & Electric	 	2031	 	 	 	 	 	 	
Wildorado	 	Vega, TX	 	161	
 	 	121	
 	 	74.9	%	 	Wind	 	April 2007	 	Southwestern Public Service Company	 	2027	 	 	 	 	 	 	
Total Wind	 	2,206	
 	 	1,999	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Thermal Generation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Dover	 	Dover, DE	 	104	
 	 	104	
 	 	100	%	 	Natural Gas	 	June 2013	 	Power sold into PJM markets	 	 	 	 	 	 	
Paxton Creek Cogen	 	Harrisburg, PA 	 	12	
 	 	12	
 	 	100	%	 	Natural Gas	 	November 1986	 	Power sold into PJM markets	 	 	 	 	 	 	
Princeton Hospital	 	Princeton, NJ	 	5	
 	 	5	
 	 	100	%	 	Natural Gas	 	January 2012	 	Excess power sold to local utility	 	 	 	 	 	 	
Tucson Convention Center	 	Tucson, AZ	 	2	
 	 	2	
 	 	100	%	 	Natural Gas	 	January 2003	 	Excess power sold to local utility	 	 	 	 	 	 	
University of Bridgeport	 	Bridgeport, CT	 	1	
 	 	1	
 	 	100	%	 	Natural Gas	 	April 2015	 	University of Bridgeport	 	2034	 	 	 	 	 	 	
Total Thermal Generation	 	124	
 	 	124	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total NRG Yield, Inc. (e)	 	5,523	
 	 	4,559	

 	

(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.
(d)  PPA began on January 1, 2016.
(e)  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.

34

                        

During the year ended December 31, 2015, the Company entered into a partnership agreement with NRG, the purpose of which is to own or purchase solar power generation projects and other ancillary related assets in the U.S. from NRG Renew DG Holdings LLC, as summarized in the table below:

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	PPA Terms	
Tax-equity projects	 	Rated MW (a)	 	Sites	 	COD	 	Fuel	 	Counterparty	 	Expiration	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Community solar projects	 	8	
 	 	10	 	Q3 2015	 	Solar	 	Various commercial, residential and government entities	 	2035	
Commercial photovoltaic projects	 	37	
 	 	12	 	Q3 2015-Q1 2016	 	Solar	 	Various commercial and government entities	 	2030-2035	
Total distributed generation tax equity projects	 	45	
 	 	22	 	 	 	 	 	 	 	 	

 	

(a)  Represents maximum generating capacity at standard test conditions of a facility multiplied by the Company's percentage ownership of that facility, disregarding any equity interests held by any tax equity investor, any lessor under sale-leaseback financing, or any non-controlling interests in a partnership.
The following table summarizes the Company's thermal steam and chilled water facilities as of December 31, 2015:

Name and Location of Facility	 	% Owned	 	Thermal Energy Purchaser	 	Megawatt
Thermal
Equivalent
Capacity (MWt)	 	Generating
Capacity	
NRG Energy Center Minneapolis, MN	 	100.0	 	Approx. 100 steam and 50 chilled water customers	 	322
136	
 	 	Steam: 1,100 MMBtu/hr.
Chilled water: 38,700 tons	
NRG Energy Center San Francisco, CA	 	100.0	 	Approx. 180 steam customers	 	133	
 	 	Steam: 454 MMBtu/hr.	
NRG Energy Center Omaha, NE	 	100.0
12.0 (a)
100.0
0.0 (a)	 	Approx. 60 steam and 60 chilled water customers	 	142
73
77
26	
 	 	Steam: 485 MMBtu/hr
Steam: 250 MMBtu/hr
Chilled water: 22,000 tons
Chilled water: 7,250 tons	
NRG Energy Center Harrisburg, PA	 	100.0	 	Approx. 140 steam and 3 chilled water customers	 	108
13	
 	
 	Steam: 370 MMBtu/hr.
Chilled water: 3,600 tons	
NRG Energy Center Phoenix, AZ	 	0.0(a)
100.0
12.0 (a)
0.0 (a)	 	Approx. 35 chilled water customers	 	4
104
14
28	
 	 	Steam: 13 MMBtu/hr
Chilled water: 29,600 tons
Chilled water: 3,950 tons
Chilled water: 8,000 tons	
NRG Energy Center Pittsburgh, PA	 	100.0	 	Approx. 25 steam and 25 chilled water customers	 	88
46	
 	 	Steam: 302 MMBtu/hr.
Chilled water: 12,934 tons	
NRG Energy Center San Diego, CA	 	100.0	 	Approx. 15 chilled water customers	 	31	
 	 	Chilled water: 8,825 tons	
NRG Energy Center Dover, DE	 	100.0	 	Kraft Foods Inc. and Procter & Gamble Company	 	66	
 	 	Steam: 225 MMBtu/hr.	
NRG Energy Center Princeton, NJ	 	100.0	 	Princeton HealthCare System	 	21
17	
 	 	Steam: 72 MMBtu/hr.
Chilled water: 4,700 tons	
 	 	 	 	Total Generating Capacity (MWt)	 	1,449	

 	

(a)  Net MWt capacity 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.

Other Properties

Through the Management Services Agreement with NRG, the Company utilizes NRG's leased corporate headquarters offices at 211 Carnegie Center, Princeton, New Jersey. During 2016, NRG expects to move its 211 Carnegie Center, Princeton, New Jersey headquarters to a newly leased headquarters at 804 Carnegie Center, Princeton, New Jersey, which is currently under construction.

35

                        

Item 3 — Legal Proceedings
None.
Item 4 — Mine Safety Disclosures
Not applicable.

36

                        

PART II
Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information and Holders
The Company's Class A common stock and Class C common stock are listed on the New York Stock Exchange and trade under the ticker symbols "NYLD.A" and "NYLD", respectively. The Company's Class B common stock and Class D common stock are not publicly traded.
As of January 31, 2016, there were two holders of record of the Class A common stock, one holder of record of the Class B common stock, two holders of record of the Class C common stock and one holder of record of the Class D common stock.
The following table sets forth, for the period indicated, the high and low sales prices as well as the closing price of the Company's Class A and Class C common stock as reported by the New York Stock Exchange. The Company's Class C common stock began trading on the New York Stock Exchange on May 15, 2015. The historical Class A common stock sales prices below are adjusted to give effect to the stock split that occurred in connection with the Recapitalization:

Common Stock Price Class A	Fourth Quarter 2015	 	Third Quarter 2015	 	Second Quarter 2015	 	First Quarter 2015  (a)	 	Fourth
Quarter
2014 (a)	 	Third Quarter 2014  (a)	 	Second Quarter 2014  (a)	 	First Quarter 2014  (a)	
High	$16.11	 	$22.55	 	$26.95	 	$26.65	 	$25.42	 	$27.58	 	$26.60	 	$20.29	
Low	10.50	 	10.44	 	21.84	 	22.19	 	19.82	 	23.45	 	19.72	 	17.44	
Closing	13.91	 	11.15	 	21.99	 	24.29	 	23.57	 	26.99	 	20.20	 	20.00	
Dividends Per Common Share	$0.215	 	$0.21	 	$0.20	 	$0.195	 	$0.1875	 	$0.183	 	$0.175	 	$0.165	
Common Stock Price Class C	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
High	$16.79	 	$22.63	 	$28.11	 	N/A	 	N/A	 	N/A	 	N/A	 	N/A	
Low	11.30	 	10.79	 	21.79	 	N/A	 	N/A	 	N/A	 	N/A	 	N/A	
Closing	14.76	 	11.61	 	21.89	 	N/A	 	N/A	 	N/A	 	N/A	 	N/A	
Dividends Per Common Share	$0.215	 	$0.21	 	$0.20	 	$0.195	 	$0.1875	 	$0.183	 	$0.175	 	$0.165	

 	
 	
(a)  Dividends per common share have been retroactively adjusted to give effect to the stock split that occurred in connection with the Recapitalization.
N/A - Not applicable.
Dividends
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.
The Company's Class A and Class C common stock dividends are subject to available capital, market conditions, and compliance with associated laws and regulations. The Company expects that, based on current circumstances, comparable cash dividends will continue to be paid in the foreseeable future.

37

                        

Stock Performance Graph
The performance graph below compares the Company's cumulative total stockholder return on the Company's Class A common stock for the period from July 16, 2013 through May 14, 2015, the date of the Recapitalization, and the Company's Class A common stock and Class C common stock from May 15, 2015 through December 31, 2015, with the cumulative total return of the Standard & Poor's 500 Composite Stock Price Index, or S&P 500, and the Philadelphia Utility Sector Index, or UTY.
The performance graph shown below is being furnished and compares each period assuming that $100 was invested on the initial public offering date in each of the Class A common stock of the Company, the Class C common stock of the Company, the stocks included in the S&P 500 and the stocks included in the UTY, and that all dividends were reinvested.
Comparison of Cumulative Total Return

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	July 16, 2013	 	December 31, 2013	 	December 31, 2014	 	December 31, 2015	
NRG Yield, Inc. Class A common stock	$	100.00	
 	 	$	187.32	
 	 	$	226.55	
 	 	$	146.55	
 	
NRG Yield, Inc. Class C common stock (a)	100.00	
 	 	187.32	
 	 	226.55	
 	 	154.27	
 	
S&P 500	100.00	
 	 	111.36	
 	 	126.61	
 	 	128.36	
 	
UTY	100.00	
 	 	97.64	
 	 	124.97	
 	 	117.51	

 	

(a) Class C common stock price has been indexed to the Class A common stock price from the NRG Yield, Inc. initial public offering date until the Recapitalization, and reflects the Class C common stock Total Return Performance beginning on May 15, 2015.

38

                        

Item 6 — Selected Financial Data
The following table presents the Company's historical selected financial data, which has been recast to include the Drop Down Assets, as if the transfers had taken place from the beginning of the financial statements period, or from the date the respective entities were under common control (if later than the beginning of the financial statements period). The acquisitions are 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.

39

                        

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	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	$	869	
 	 	$	746	
 	 	$	387	
 	 	$	184	
 	 	$	173	
 	
Operating Costs and Expenses	 	 	 	 	 	 	 	 	 	
Cost of operations	312	
 	 	266	
 	 	148	
 	 	118	
 	 	112	
 	
Depreciation and amortization	265	
 	 	202	
 	 	74	
 	 	38	
 	 	35	
 	
General and administrative	12	
 	 	8	
 	 	7	
 	 	7	
 	 	6	
 	
Acquisition-related transaction and integration costs	3	
 	 	4	
 	 	—	
 	 	—	
 	 	—	
 	
Total operating costs and expenses	592	
 	 	480	
 	 	229	
 	 	163	
 	 	153	
 	
Operating Income	277	
 	 	266	
 	 	158	
 	 	21	
 	 	20	
 	
Other Income (Expense)	 	 	 	 	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	35	
 	 	25	
 	 	22	
 	 	19	
 	 	13	
 	
Other income, net	2	
 	 	3	
 	 	3	
 	 	2	
 	 	2	
 	
Loss on extinguishment of debt	(9	)	 	—	
 	 	—	
 	 	—	
 	 	—	
 	
Interest expense	(238	)	 	(191	)	 	(52	)	 	(28	)	 	(21	)	
Total other expense, net	(210	)	 	(163	)	 	(27	)	 	(7	)	 	(6	)	
Income Before Income Taxes	67	
 	 	103	
 	 	131	
 	 	14	
 	 	14	
 	
Income tax expense	12	
 	 	4	
 	 	8	
 	 	10	
 	 	9	
 	
Net Income	$	55	
 	 	$	99	
 	 	$	123	
 	 	$	4	
 	 	$	5	
 	
Less: Pre-acquisition net (loss) income of Drop Down Assets	(20	)	 	35	
 	 	14	
 	 	 	 	 	
Net Income Excluding Pre-acquisition Net Income of Acquired ROFO 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	
 	 	$	33	
 	 	$	353	
 	 	$	564	
 	 	$	373	
 	
Cash Flow Data:	 	 	 	 	 	 	 	 	 	
  Net cash provided by (used in):	 	 	 	 	 	 	 	 	 	
    Operating activities	$	373	
 	 	$	310	
 	 	$	120	
 	 	$	56	
 	 	$	32	
 	
    Investing activities	(1,118	)	 	(1,033	)	 	(515	)	 	(594	)	 	(468	)	
    Financing activities	427	
 	 	1,093	
 	 	432	
 	 	536	
 	 	427	
 	
Balance Sheet Data (at period end):	 	 	 	 	 	 	 	 	 	
  Cash and cash equivalents	$	111	
 	 	$	429	
 	 	$	59	
 	 	$	22	
 	 	$	24	
 	
  Property, plant and equipment, net	5,056	
 	 	5,175	
 	 	2,498	
 	 	2,350	
 	 	1,095	
 	
  Total assets	7,775	
 	 	7,860	
 	 	3,430	
 	 	2,745	
 	 	1,461	
 	
  Long-term debt, including current maturities	4,803	
 	 	4,921	
 	 	1,745	
 	 	1,094	
 	 	445	
 	
  Total liabilities	5,143	
 	 	5,235	
 	 	1,947	
 	 	1,503	
 	 	652	
 	
  Total stockholders' equity	2,632	
 	 	2,625	
 	 	1,483	
 	 	1,242	
 	 	809	

 	

(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.

40

                        

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 and the November 2015 Drop Down Assets, which were acquired on June 30, 2014, January 2, 2015, and November 3, 2015, 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 Consolidated Statements of Operations to this Form 10-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 , 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.	

41

                        

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  4,435 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,	

42

                        

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.	

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	

43

                        

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 .

44

                        

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	$	925	
 	 	$	773	
 	 	20	
 	
Contract amortization	(54	)	 	(29	)	 	86	
 	
Mark-to-market economic hedging activities	(2	)	 	2	
 	 	(200	)	
Total operating revenues	869	
 	 	746	
 	 	16	
 	
Operating Costs and Expenses	 	 	 	 	 	
Cost of fuels	71	
 	 	89	
 	 	(20	)	
Operations and maintenance	171	
 	 	131	
 	 	31	
 	
Other cost of operations	70	
 	 	46	
 	 	52	
 	
Depreciation and amortization	265	
 	 	202	
 	 	31	
 	
General and administrative	12	
 	 	8	
 	 	50	
 	
Acquisition-related transaction and integration costs	3	
 	 	4	
 	 	(25	)	
Total operating costs and expenses	592	
 	 	480	
 	 	23	
 	
Operating Income	277	
 	 	266	
 	 	4	
 	
Other Income (Expense)	 	 	 	 	
 	
Equity in earnings of unconsolidated affiliates	35	
 	 	25	
 	 	40	
 	
Other income, net	2	
 	 	3	
 	 	(33	)	
Loss on extinguishment of debt	(9	)	 	—	
 	 	100	
 	
Interest expense	(238	)	 	(191	)	 	25	
 	
Total other expense, net	(210	)	 	(163	)	 	29	
 	
Income Before Income Taxes	67	
 	 	103	
 	 	(35	)	
Income tax expense	12	
 	 	4	
 	 	200	
 	
Net Income	55	
 	 	99	
 	 	(44	)	
Less: Pre-acquisition net income of Drop Down Assets	(20	)	 	35	
 	 	(157	)	
Net Income Excluding Pre-acquisition Net 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)	5,740	
 	 	3,977	
 	
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.

45

                        

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.

Economic 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. 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 does not include mark-to-market gains or losses on economic hedging activities or contract amortization. The following tables present the composition of economic gross margin for the years ended December 31, 2015 and 2014:

 	Conventional	 	Renewables	 	Thermal	 	Total	
(In millions)	 	
Year ended December 31, 2015	 	 	 	 	 	 	
 	
Energy and capacity revenues	$	341	
 	 	$	408	
 	 	$	176	
 	 	$	925	
 	
Cost of fuels	(1	)	 	(1	)	 	(69	)	 	(71	)	
Economic gross margin	$	340	
 	 	$	407	
 	 	$	107	
 	 	$	854	

Year ended December 31, 2014	 	 	 	 	 	 	 	
Energy and capacity revenues	$	321	
 	 	$	255	
 	 	$	197	
 	 	$	773	
 	
Cost of fuels	(2	)	 	(1	)	 	(86	)	 	(89	)	
Economic gross margin	$	319	
 	 	$	254	
 	 	$	111	
 	 	$	684	
 	
Economic gross marginincreased by $170 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	(4	)	
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	)	
 	$	170	

46

                        

Contract amortization
Contract amortization increased by $25 million during the year ended December 31, 2015, compared to the same period in 2014 ,  due primarily to the amortization of the PPAs acquired in the acquisition of the Alta Wind Portfolio in August 2014.
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 .
Operations and Maintenance Expense

 	Conventional	 	Renewables	 	Thermal	 	Total	
(In millions)	 	
Year ended December 31, 2015	$	30	
 	 	$	90	
 	 	$	51	
 	 	$	171	
 	
Year ended December 31, 2014	30	
 	 	54	
 	 	47	
 	 	131	
 	
Operations and maintenance expense increased by $40 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	3	
 	
 	$	40	
 	
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 $63 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 $10 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	

47

                        

Income Tax Expense
For the year ended December 31, 2015, the Company recorded income tax expense of $12 million on pretax income of $67 million. For the same period in 2014, the Company recorded income tax expense of $4 million on pretax income of $103 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.

48

                        

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	$	773	
 	 	$	388	
 	 	99	
 	
Contract amortization	(29	)	 	(1	)	 	N/M	
 	
Mark-to-market economic hedging activities	2	
 	 	—	
 	 	100	
 	
Total operating revenues	746	
 	 	387	
 	 	93	
 	
Operating Costs and Expenses	 	 	 	 	 	
Cost of fuels	89	
 	 	68	
 	 	31	
 	
Operations and maintenance	131	
 	 	66	
 	 	98	
 	
Other cost of operations	46	
 	 	14	
 	 	229	
 	
Depreciation and amortization	202	
 	 	74	
 	 	173	
 	
General and administrative — affiliate	8	
 	 	7	
 	 	14	
 	
Acquisition-related transaction and integration costs	4	
 	 	—	
 	 	100	
 	
Total operating costs and expenses	480	
 	 	229	
 	 	110	
 	
Operating Income	266	
 	 	158	
 	 	68	
 	
Other Income (Expense)	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	25	
 	 	22	
 	 	14	
 	
Other income, net	3	
 	 	3	
 	 	—	
 	
Interest expense	(191	)	 	(52	)	 	267	
 	
Total other expense, net	(163	)	 	(27	)	 	504	
 	
Income Before Income Taxes	103	
 	 	131	
 	 	(21	)	
Income tax expense	4	
 	 	8	
 	 	(50	)	
Net Income	99	
 	 	123	
 	 	(20	)	
Less: Pre-acquisition net income of Drop Down Assets	35	
 	 	14	
 	 	150	
 	
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)	3,977	
 	 	1,221	
 	
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.

49

                        

Management’s discussion of the results of operations for the years ended December 31, 2014, and 2013
Economic Gross Margin    

 	Conventional	 	Renewables	 	Thermal	 	Total	
 (In millions)	 	 	 	
Year ended December 31, 2014	 	 	 	 	 	 	
 	
Energy and capacity revenues	$	321	
 	 	$	255	
 	 	$	197	
 	 	$	773	
 	
Cost of fuels	(2	)	 	(1	)	 	(86	)	 	(89	)	
Economic gross margin	$	319	
 	 	$	254	
 	 	$	111	
 	 	$	684	

Year ended December 31, 2013	 	 	 	 	 	 	 	
Energy and capacity revenues	$	138	
 	 	$	97	
 	 	$	153	
 	 	$	388	
 	
Cost of fuels	(5	)	 	—	
 	 	(63	)	 	(68	)	
Economic gross margin	$	133	
 	 	$	97	
 	 	$	90	
 	 	$	320	
 	
Economic gross marginincreased by $364 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	$	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 and Borrego facilities reaching commercial operations in 2013	6	
 	
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	
 	
 	$	364	
 	
Contract amortization
Contract amortization increased by $28 million during the year ended December 31, 2014, compared to the same period in 2013 ,  primarily 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.
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	
 	 	$	54	
 	 	$	47	
 	 	$	131	
 	
Year ended December 31, 2013	11	
 	 	14	
 	 	41	
 	 	66	

50

                        

Operations and maintenance expense increased by $65 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 and Borrego facilities reaching commercial operations in 2013	2	
 	
Thermal:	 	
Acquisition of Energy Systems in December 2013	6	
 	
 	$	65	
 	
Other Costs of Operations
Other costs of operations increased by $32 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 $128 million during the year ended December 31, 2014, compared to the same period in 2013, due to:

(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	
 	
 	$	128	
 	
Equity in Earnings of Unconsolidated Affiliates
Equity in earnings of unconsolidated affiliates increased by $3 million during the year ended December 31, 2014, compared to the same period in 2013, due primarily to CVSR reaching commercial operations in 2013, partially offset by losses from San Juan Mesa, acquired with the EME Assets.
Interest Expense     
Interest expense increased by $139 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	
 	
 	$	139	

51

                        

Income Tax Expense
For the year ended December 31, 2014, the Company recorded income tax expense of $4 million on pretax income of $103 million. For the same period in 2013, the Company recorded income tax expense of $8 million on pretax income of $131 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.
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 $292 million and $888 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	
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.

52

                        

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 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.

53

                        

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	
 	
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	241	
 	 	252	
 	 	260	
 	 	276	
 	 	326	
 	 	2,106	
 	 	3,461	
 	
Total debt	$	241	
 	 	$	252	
 	 	$	260	
 	
 	$	927	
 	
 	$	613	
 	
 	$	2,606	
 	
 	$	4,899	
 	
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, $33 million, and $353 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 and El Segundo.

54

                        

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.

55

                        

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	$	373	
 	 	$	310	
 	 	$	63	
 	
Net cash used in investing activities	(1,118	)	 	(1,033	)	 	(85	)	
Net cash provided by financing activities	427	
 	 	1,093	
 	 	(666	)	
Net Cash Provided By Operating Activities

Changes to net cash provided by operating activities were driven by:	(In millions)	
Higher net distributions from unconsolidated affiliates for the period ending December 31, 2015, compared to the same period in 2014	$	24	
 	
Increase in operating income adjusted for non-cash items and changes in working capital	39	
 	
 	$	63	
 	
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	4	
 	
Changes in restricted cash primarily due to cash transfers in connection with higher debt principal payments in 2015	(50	)	
Increase in net investments in unconsolidated affiliates in 2015, compared to 2014, primarily due to the investment in Desert Sunlight made in 2015	(367	)	
Proceeds from renewable energy grants in 2014	(137	)	
Other	(12	)	
 	$	(85	)	
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	250	
 	
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	(802	)	
Increase in dividends and distributions paid	(38	)	
Decrease in debt issuance costs due to lower borrowings in 2015	23	
 	
 	$	(666	)	

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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	$	310	
 	 	$	120	
 	 	$	190	
 	
Net cash used in investing activities	(1,033	)	 	(515	)	 	(518	)	
Net cash provided by financing activities	1,093	
 	 	432	
 	 	661	
 	
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 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	11	
 	
Decreased working capital requirements due to assets placed in service in 2013	39	
 	
 	$	190	
 	
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	320	
 	
Decrease in restricted cash, primarily for Marsh Landing, Borrego, Alta Wind Portfolio, El Segundo, Alpine and High Desert	92	
 	
Increase in notes receivable, including affiliates	(2	)	
Increase in proceeds from renewable grants in 2014 compared to 2013	112	
 	
Decrease in investments in unconsolidated affiliates in 2014 compared to 2013	41	
 	
Other	11	
 	
 	$	(518	)	
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	$	248	
 	
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 cash received from issuance of Senior Notes and other long-term debt, partially offset by higher principal payments in 2014 compared to 2013	178	
 	
Increase in cash paid for deferred financing costs	(31	)	
 	$	661	

57

                        

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 $842 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)	$	409	
 	 	$	836	
 	 	$	1,781	
 	 	$	2,902	
 	 	$	5,928	
 	 	$	7,353	
 	
Operating leases	12	
 	 	18	
 	 	17	
 	 	135	
 	 	182	
 	 	203	
 	
Fuel purchase and transportation obligations	12	
 	 	9	
 	 	6	
 	 	21	
 	 	48	
 	 	53	
 	
Other liabilities	9	
 	 	18	
 	 	16	
 	 	62	
 	 	105	
 	 	118	
 	
Total	$	442	
 	 	$	881	
 	 	$	1,820	
 	 	$	3,120	
 	 	$	6,263	
 	 	$	7,727	
 	
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.

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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.

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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.

60

                        

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.

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Item 7A — Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to several market risks in its normal business activities. Market risk is the potential loss that may result from market changes associated with the Company's power generation or with an existing or forecasted financial or commodity transaction. The types of market risks the Company is exposed to are commodity price risk, interest rate risk, liquidity risk, and credit risk.
Commodity Price Risk
Commodity price risks result from exposures to changes in spot prices, forward prices, volatilities, and correlations between various commodities, such as electricity, natural gas and emissions credits. The Company manages the commodity price risk of its merchant generation operations by entering into derivative or non-derivative instruments to hedge the variability in future cash flows from forecasted power sales or purchases of fuel. The portion of forecasted transactions hedged may vary based upon management's assessment of market, weather, operation and other factors.
Based on a sensitivity analysis using simplified assumptions, the impact of a $0.50 per MMBtu increase or decrease in natural gas prices across the term of the derivative contracts would cause a change of approximately $2 million in the net value of derivatives as of  December 31, 2015 .
Interest Rate Risk
The Company is exposed to fluctuations in interest rates through its issuance of variable rate debt. Exposures to interest rate fluctuations may be mitigated by entering into derivative instruments known as interest rate swaps, caps, collars and put or call options. These contracts reduce exposure to interest rate volatility and result in primarily fixed rate debt obligations when taking into account the combination of the variable rate debt and the interest rate derivative instrument. NRG's risk management policies allow the Company to reduce interest rate exposure from variable rate debt obligations.
Most of the Company's project subsidiaries enter into interest rate swaps, intended to hedge the risks associated with interest rates on non-recourse project level debt. See Item 15 —  Note 9 ,  Long-term Debt , to the Consolidated Financial Statements for more information about interest rate swaps of the Company's project subsidiaries.
If all of the above swaps had been discontinued on December 31, 2015, the Company would have owed the counterparties $101 million. Based on the investment grade rating of the counterparties, the Company believes its exposure to credit risk due to nonperformance by counterparties to its hedge contracts to be insignificant.
The Company has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates. As of  December 31, 2015 , a 1% change in interest rates would result in an approximately $3 million change in interest expense on a rolling twelve month basis.
As of December 31, 2015, the fair value of the Company's debt was $4,745 million and the carrying value was $4,863 million. The Company estimates that a 1% decrease in market interest rates would have increased the fair value of its long-term debt by $331 million.
Liquidity Risk
Liquidity risk arises from the general funding needs of the Company's activities and in the management of the Company's assets and liabilities.
Counterparty Credit Risk
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, and (ii) the use of credit mitigation measures such as prepayment arrangements or volumetric limits. 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.
Item 8 — Financial Statements and Supplementary Data
The financial statements and schedules are listed in Part IV, Item 15 of this Form 10-K.

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Item 9 — Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A — Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures and Internal Control Over Financial Reporting
Under the supervision and with the participation of the Company's management, including its principal executive officer, principal financial officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act. Based on this evaluation, the Company's principal executive officer, principal financial officer and principal accounting officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report on Form 10-K.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred in the fourth quarter of 2015 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations over Internal Controls
The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. The Company's internal control over financial reporting includes those policies and procedures that:
1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets;
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. GAAP, and that the Company's receipts and expenditures are being made only in accordance with authorizations of its management and directors; and
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the consolidated financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management's Report on Internal Control over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of the Company's management, including its principal executive officer, principal financial officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the Company's evaluation under the framework in  Internal Control — Integrated Framework (2013) , the Company's management concluded that its internal control over financial reporting was effective as of December 31, 2015.
The effectiveness of the Company's internal control over financial reporting as of December 31, 2015, has been audited by KPMG LLP, the Company's independent registered public accounting firm, as stated in its report which is included in this Form 10-K.

63

                        

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
NRG Yield, Inc.:
We have audited 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). NRG Yield, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit 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 effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, NRG Yield, Inc. maintained, in all material respects, effective 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.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 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, and our report dated February 29, 2016, expressed an unqualified opinion on those consolidated financial statements.
(signed) KPMG LLP
Philadelphia, PA
February 29, 2016

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Item 9B — Other Information
On February 23, 2016, the Company filed a Certificate of Correction of the Company’s Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. The Certificate of Correction was filed to clarify that the voting standards for director election and director removal are based on the proportion of “votes entitled to be cast” by the holders of the Company’s common stock, which is consistent with the voting scheme adopted by the Company's stockholders at the annual stockholder meeting approving the Recapitalization. The Certificate of Correction became effective upon filing.
A copy of the Certificate of Correction, as filed with the Secretary of State of the State of Delaware on February 23, 2016, is attached as Exhibit 3.3 to this Annual Report on Form 10-K and is incorporated herein by reference.
Also on February 23, 2016, the Company's Third Amended and Restated Bylaws became effective. The Third Amended and Restated Bylaws were adopted to clarify that a quorum for stockholder meetings is based on a majority of the voting power of the capital stock of the Company.
A copy of the Third Amended and Restated Bylaws is attached as Exhibit 3.4 to this Annual Report on Form 10-K and is incorporated herein by reference.
PART III
Item 10 — Directors, Executive Officers and Corporate Governance
Directors
Kirkland B. Andrews has served as Executive Vice President, Chief Financial Officer and director since the Company's formation in December 2012. Mr. Andrews has served as Executive Vice President and Chief Financial Officer of NRG Energy since September 2011. Prior to joining NRG, he served as Managing Director and Co-Head Investment Banking, Power and Utilities—Americas at Deutsche Bank Securities from June 2009 to September 2011. Prior to this, he served in several capacities at Citigroup Global Markets Inc., including Managing Director, Group Head, North American Power from November 2007 to June 2009, and Head of Power M&A, Mergers and Acquisitions from July 2005 to November 2007. In his banking career, Mr. Andrews led multiple large and innovative strategic, debt, equity and commodities transactions. Mr. Andrews’ extensive investment banking experience, specifically in the energy industry and financial structuring, brings important experience and skills to the Company’s board of directors.
John F. Chlebowski has served as Interim Chairman of the Board since December 2015 and a director since July 2013. Mr. Chlebowski had been a director of NRG from December 2003 to July 2013. Mr. Chlebowski served as the President and Chief Executive Officer of Lakeshore Operating Partners, LLC, a bulk liquid distribution firm, from March 2000 until his retirement in December 2004. From July 1999 until March 2000, Mr. Chlebowski was a senior executive and cofounder of Lakeshore Liquids Operating Partners, LLC, a private venture firm in the bulk liquid distribution and logistics business, and from January 1998 until July 1999, he was a private investor and consultant in bulk liquid distribution. From 1994 until 1997, he was the President and Chief Executive Officer of GATX Terminals Corporation, a subsidiary of GATX Corporation. Prior to that, he served as Vice President of Finance and Chief Financial Officer of GATX Corporation from 1986 to 1994. Mr. Chlebowski is a director of First Midwest Bancorp Inc. and the Non-Executive Chairman of SemGroup Corporation. Mr. Chlebowski also served as a director of Laidlaw International, Inc. from June 2003 until October 2007, SpectraSite, Inc. from June 2004 until August 2005, and Phosphate Resource Partners Limited Partnership from June 2004 until August 2005. Mr. Chlebowski’s extensive leadership and financial expertise, as a result of his position as a former chief executive officer and his service on several boards of companies involved in the restructuring or recovery of their core business, enable him to contribute to the board of directors' significant managerial, strategic, and financial oversight skills. Furthermore, Mr. Chlebowski’s service on other public boards, notably as a non-executive Chairman, provides valuable insight into the application of various governance principals to the Company’s board of directors.
Brian R. Ford has served as a director since July 2013. Mr. Ford was the Chief Executive Officer of Washington Philadelphia Partners, LP, a real estate investment company, from 2008 through 2010. He retired as a partner from Ernst & Young LLP in June 2008 where he had been employed since 1971. Mr. Ford currently serves on the board of various public companies: GulfMark Offshore, Inc., a global provider of marine transportation, since 2009, where he also serves as the chairman of the audit committee and as a member of the governance nominating committee; AmeriGas Propane, Inc., a propane company, since 2013, where he also serves as a member of its audit committee and corporate governance committee; FS Investment Corporation III, a specialty finance company that invests primarily in the debt securities of private U.S. middle-market companies, since 2013, where he also serves as the chairman of the audit committee.  He also serves on the boards of Drexel University and Drexel University College of Medicine. Mr. Ford received his B.S. in Economics from Rutgers University.  Mr. Ford's extensive experience in accounting and public company matters provides strong financial, audit and accounting skills to the Company's board of directors.

65

                        

Mauricio Gutierrez has served as Interim President and Chief Executive Officer since December 2015, and a director since the Company's formation in December 2012.  From December 2012 to December 2015, Mr. Gutierrez was the Executive Vice President and Chief Operating Officer of the Company.  Mr. Gutierrez has also served as President and Chief Executive Officer of NRG since December 2015.  Prior to December 2015, Mr. Gutierrez was the Executive Vice President and Chief Operating Officer of NRG from July 2010 to December 2015.  Mr. Gutierrez has been with NRG since August 2004 and served in multiple executive positions within NRG including Executive Vice President - Commercial Operations of NRG from January 2009 to July 2010 and Senior Vice President - Commercial Operations of NRG from March 2008 to January 2009.  Prior to joining NRG in August 2004, Mr. Gutierrez held various commercial positions within Dynegy, Inc.  Mr. Gutierrez’s knowledge of the Company’s assets, operations and businesses bring important experience and skills to the Company’s board of directors. 
Ferrell P. McClean has served as a director since July 2013. Ms. McClean was a Managing Director and the Senior Advisor to the head of the Global Oil & Gas Group in Investment Banking at J.P. Morgan Chase & Co. from 2000 through the end of 2001. She joined J.P. Morgan & Co. Incorporated in 1969 and founded the Leveraged Buyout and Restructuring Group within the Mergers & Acquisitions Group in 1986. From 1991 until 2000, Ms. McClean was a Managing Director and co-headed the Global Energy Group within the Investment Banking Group at J.P. Morgan & Co. She retired as a director of GrafTech International in 2014, El Paso Corporation in 2012 and Unocal Corporation in 2005. Ms. McClean's experience in investment banking for industrial companies as well as her experience and understanding of financial accounting, finance and disclosure matters enables her to provide essential guidance to the Company's board of directors and management team.
Christopher S. Sotoshas served as a director since May 2013. Mr. Sotos has served as Senior Vice President—Strategy and Mergers and Acquisitions of NRG since November 2012. Previously, he served as NRG's Senior Vice President and Treasurer from March 2008 to September 2012. In this role, he was responsible for all treasury functions, including raising capital, valuation, debt administration and cash management. Mr. Sotos joined NRG in 2004 as a Senior Finance Analyst, following more than nine years in key financial roles within the energy sector and other industries for Houston-based companies such as Koch Capital Markets, Entergy Wholesale Operations and Service Corporation International. Mr. Sotos also serves on the board of FuelCell Energy, Inc. Mr. Sotos brings strong financial and accounting skills to the Company's board of directors.
Executive Officers
For biographical information for Messrs. Gutierrez and Andrews, see above under “Directors.”
David Callen has served as Vice President and Chief Accounting Officer since March 2015. In this capacity, Mr. Callen is responsible for directing the Company's financial accounting and reporting activities. Mr. Callen also has served as Senior Vice President and Chief Accounting Officer of NRG since February 2016 and Vice President and Chief Accounting Officer from March 2015 to February 2016. Prior to this, Mr. Callen served as NRG's Vice President, Financial Planning & Analysis from November 2010 to March 2015. He previously served as Director, Finance from October 2007 through October 2010, Director, Financial Reporting from February 2006 through October 2007, and Manager, Accounting Research from September 2004 through February 2006. Prior to NRG, Mr. Callen was an auditor for KPMG LLP in both New York City and Tel Aviv Israel from October 1996 through April 2001.
David R. Hill has served as Executive Vice President and General Counsel since the Company's formation in December 2012. Mr. Hill has served as Executive Vice President and General Counsel of NRG since September 2012. Prior to joining NRG, Mr. Hill was a partner and co-head of Sidley Austin LLP's global energy practice group from February 2009 to August 2012. Prior to joining Sidley Austin, Mr. Hill served as General Counsel of the U.S. Department of Energy from August 2005 to January 2009 and, for the three years prior to that, as Deputy General Counsel for Energy Policy of the DOE. Prior to his federal government services, Mr. Hill was a partner at major law firms in Washington D.C. and Kansas City, Missouri, and handled a variety of regulatory, litigation and corporate matters.
Code of Ethics
The Company has adopted a code of ethics entitled "NRG Yield Code of Conduct" that applies to directors and officers of the Company. It may be accessed through the "Corporate Governance" section of the Company's website at http://www.nrgyield.com.   The Company also elects to disclose the information required by Form 8-K, Item 5.05, "Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics," through the Company's website, and such information will remain available on this website for at least a 12-month period. A copy of the "NRG Yield, Inc. Code of Conduct" is available in print to any stockholder who requests it.
Other information required by this Item will be incorporated by reference to the similarly named section of the Company's Definitive Proxy Statement for its 2016 Annual Meeting of Stockholders.

66

                        

Item 11 — Executive Compensation
Information required by this Item will be incorporated by reference to the similarly named section of the Company's Definitive Proxy Statement for its 2016 Annual Meeting of Stockholders.
Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Securities Authorized for Issuance under Equity Compensation Plans

Plan Category	(a)
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights	 	(b)
Weighted-Average Exercise
Price of Outstanding
Options, Warrants and
Rights	 	(c)
Number of Securities
Remaining Available
for Future Issuance
Under Equity Compensation
Plans (Excluding
Securities Reflected
in Column (a))	
Equity compensation plans approved by security holders - Class A common stock	25,746	
 	 	$	—	
 	 	1,974,254	
 	
Equity compensation plans approved by security holders - Class C common stock	42,343	
 	 	—	
 	 	1,957,657	
 	
Equity compensation plans not approved by security holders	—	
 	 	N/A	
 	 	—	
 	
Total	68,089	
 	 	$	—	
 	 	3,931,911	

Other information required by this Item will be incorporated by reference to the similarly named section of the Company's Definitive Proxy Statement for its 2016 Annual Meeting of Stockholders.
Item 13 — Certain Relationships and Related Transactions, and Director Independence
Information required by this Item will be incorporated by reference to the similarly named section of the Company's Definitive Proxy Statement for its 2016 Annual Meeting of Stockholders.
Item 14 — Principal Accounting Fees and Services
Information required by this Item will be incorporated by reference to the similarly named section of the Company's Definitive Proxy Statement for its 2016 Annual Meeting of Stockholders.

67

                        

PART IV
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
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore, have been omitted    
(a)(3) Exhibits: See Exhibit Index submitted as a separate section of this report
(b) Exhibits
See Exhibit Index submitted as a separate section of this report
(c) Not applicable

68

                        

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
February 29, 2016

69

                        

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF INCOME

 	Year ended December 31,	
(In millions, except per share amounts)	2015	 	2014 (a)	 	2013 (a)	
Operating Revenues	 	 	 	 	 	
Total operating revenues	$	869	
 	 	$	746	
 	 	$	387	
 	
Operating Costs and Expenses	 	 	 	 	 	
Cost of operations	312	
 	 	266	
 	 	148	
 	
Depreciation and amortization	265	
 	 	202	
 	 	74	
 	
General and administrative	12	
 	 	8	
 	 	7	
 	
Acquisition-related transaction and integration costs	3	
 	 	4	
 	 	—	
 	
Total operating costs and expenses	592	
 	 	480	
 	 	229	
 	
Operating Income	277	
 	 	266	
 	 	158	
 	
Other Income (Expense)	 	 	 	 	 	
Equity in earnings of unconsolidated affiliates	35	
 	 	25	
 	 	22	
 	
Other income, net	2	
 	 	3	
 	 	3	
 	
Loss on extinguishment of debt	(9	)	 	—	
 	 	—	
 	
Interest expense	(238	)	 	(191	)	 	(52	)	
Total other expense, net	(210	)	 	(163	)	 	(27	)	
Income Before Income Taxes	67	
 	 	103	
 	 	131	
 	
Income tax expense	12	
 	 	4	
 	 	8	
 	
Net Income	55	
 	 	99	
 	 	123	
 	
Less: Pre-acquisition net (loss) income of Drop Down Assets	(20	)	 	35	
 	 	14	
 	
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.

70

                        

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 	Year ended December 31,	
 	2015	 	2014 (a)	 	2013 (a)	
 	(In millions)	
Net Income	$	55	
 	 	$	99	
 	 	$	123	
 	
Other Comprehensive (Loss) Income, net of tax	 	 	 	 	 	
Unrealized (loss) gain on derivatives, net of income tax benefit (expense) of $10, $5, and ($16)	(8	)	 	(61	)	 	48	
 	
Other comprehensive (loss) income	(8	)	 	(61	)	 	48	
 	
Comprehensive Income	47	
 	 	38	
 	 	$	171	
 	
Less: Predecessor comprehensive income prior to initial public offering on July 22, 2013	—	
 	 	—	
 	 	73	
 	
Less: Pre-acquisition net (loss) income of Drop Down Assets	(20	)	 	35	
 	 	14	
 	
Less: Comprehensive income (loss) attributable to noncontrolling interests	52	
 	 	(4	)	 	69	
 	
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.

71

                        

NRG YIELD, INC.
CONSOLIDATED BALANCE SHEETS

 	December 31, 2015	 	December 31, 2014 (a)	
ASSETS	(In millions)	
Current Assets	 	 	 	
Cash and cash equivalents	$	111	
 	 	$	429	
 	
Restricted cash	48	
 	 	47	
 	
Accounts receivable — trade	95	
 	 	90	
 	
Accounts receivable — affiliate	—	
 	 	28	
 	
Inventory	35	
 	 	32	
 	
Derivative instruments — affiliate	—	
 	 	2	
 	
Notes receivable	7	
 	 	6	
 	
Prepayments and other current assets	22	
 	 	22	
 	
Total current assets	318	
 	 	656	
 	
Property, plant and equipment	 	 	 	
In service	5,748	
 	 	5,604	
 	
Under construction	9	
 	 	9	
 	
Total property, plant and equipment	5,757	
 	 	5,613	
 	
Less accumulated depreciation	(701	)	 	(438	)	
Net property, plant and equipment	5,056	
 	 	5,175	
 	
Other Assets	 	 	 	
Equity investments in affiliates	798	
 	 	410	
 	
Notes receivable	10	
 	 	15	
 	
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	61	
 	 	44	
 	
Total other assets	2,401	
 	 	2,029	
 	
Total Assets	$	7,775	
 	 	$	7,860	

 	

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

See accompanying notes to consolidated financial statements.

72

                        

NRG YIELD, INC.
CONSOLIDATED BALANCE SHEETS (Continued)

 	December 31, 2015	 	December 31, 2014 (a)	
LIABILITIES AND STOCKHOLDERS’ EQUITY	(In millions, except share information)	
Current Liabilities	 	 	 	
Current portion of long-term debt	$	241	
 	 	$	224	
 	
Accounts payable	23	
 	 	22	
 	
Accounts payable — affiliate	85	
 	 	46	
 	
Derivative instruments	39	
 	 	52	
 	
Accrued expenses and other current liabilities	68	
 	 	65	
 	
Total current liabilities	456	
 	 	409	
 	
Other Liabilities	 	 	 	
Long-term debt	4,562	
 	 	4,697	
 	
Derivative instruments	61	
 	 	77	
 	
Other non-current liabilities	64	
 	 	52	
 	
Total non-current liabilities	4,687	
 	 	4,826	
 	
Total Liabilities	5,143	
 	 	5,235	
 	
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	791	
 	 	1,391	
 	
Total Stockholders' Equity	2,632	
 	 	2,625	
 	
Total Liabilities and Stockholders' Equity	$	7,775	
 	 	$	7,860	

 	

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

See accompanying notes to consolidated financial statements.

73

                        

NRG YIELD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

 	Year ended December 31,	
 	2015	 	2014 (a)	 	2013 (a)	
 	(In millions)	
Cash Flows from Operating Activities	 	 	 	 	 	
Net income	$	55	
 	 	$	99	
 	 	$	123	
 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	
Distributions in excess of equity in earnings of unconsolidated affiliates	29	
 	 	5	
 	 	(6	)	
Depreciation and amortization	265	
 	 	202	
 	 	74	
 	
Amortization of financing costs and debt discount/premiums	16	
 	 	10	
 	 	4	
 	
Amortization of intangibles and out-of-market contracts	54	
 	 	28	
 	 	1	
 	
Adjustment for debt extinguishment	9	
 	 	—	
 	 	—	
 	
Change in deferred income taxes	12	
 	 	4	
 	 	8	
 	
Changes in derivative instruments	(45	)	 	(14	)	 	(21	)	
Changes in other working capital	(22	)	 	(24	)	 	(63	)	
Net Cash Provided by Operating Activities	373	
 	 	310	
 	
 	120	
 	
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	)	 	(33	)	 	(353	)	
(Increase) decrease in restricted cash	(1	)	 	49	
 	 	(43	)	
Decrease in notes receivable, including affiliates	7	
 	 	8	
 	 	10	
 	
Proceeds from renewable energy grants	—	
 	 	137	
 	 	25	
 	
Net investments in unconsolidated affiliates	(360	)	 	7	
 	 	(34	)	
Other	—	
 	 	11	
 	 	—	
 	
Net Cash Used in Investing Activities	(1,118	)	 	(1,033	)	
 	(515	)	
Cash Flows from Financing Activities	 	 	 	 	 	
Contributions from tax equity investors	122	
 	 	190	
 	 	—	
 	
Capital contributions from NRG	—	
 	 	2	
 	 	171	
 	
Distributions and return of capital to NRG prior to the acquisition of Drop Down Assets and IPO	(38	)	 	(290	)	 	(707	)	
Proceeds from the issuance of common stock	599	
 	 	630	
 	 	468	
 	
Payment of dividends and distributions	(139	)	 	(101	)	 	(15	)	
Proceeds from issuance of long-term debt	844	
 	 	975	
 	 	594	
 	
Payment of debt issuance costs	(13	)	 	(36	)	 	(5	)	
Payments for long-term debt — external	(948	)	 	(277	)	 	(72	)	
Payments for long-term debt — affiliate	—	
 	 	—	
 	 	(2	)	
Net Cash Provided by Financing Activities	427	
 	 	1,093	
 	 	432	
 	
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	$	(251	)	 	$	(180	)	 	$	(63	)	
Non-cash investing and financing activities:	 	 	 	 	 	
Additions (reductions) to fixed assets for accrued capital expenditures	1	
 	 	(21	)	 	1	
 	
Decrease to fixed assets for accrued grants	—	
 	 	—	
 	 	(207	)	
Decrease to fixed assets for deferred tax asset	—	
 	 	—	
 	 	(12	)	
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	
 	
Non-cash return of capital and distributions to NRG, net of contributions	$	(22	)	 	$	1,021	
 	 	$	4	

 	

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

See accompanying notes to consolidated financial statements.

74

                        

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)	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	1,002	
 	 	$	1,002	
 	
Members' equity - Acquired Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	240	
 	 	240	
 	
Balances at December 31, 2012	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	1,242	
 	 	1,242	
 	
Net income	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	54	
 	 	54	
 	
Pre-acquisition net loss of acquired Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(3	)	 	(3	)	
Unrealized gain on derivatives, net of tax	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	38	
 	 	38	
 	
Capital contributions from NRG, cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	171	
 	 	171	
 	
Capital contributions from NRG, non-cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	66	
 	 	66	
 	
Dividends and return of capital to NRG, cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(312	)	 	(312	)	
Dividends and return of capital to NRG, non-cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(33	)	 	(33	)	
Balance as of July 22, 2013	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	1,223	
 	 	$	1,223	
 	
Net income	—	
 	 	—	
 	 	—	
 	 	13	
 	 	—	
 	 	42	
 	 	—	
 	 	55	
 	
Pre-acquisition net income of acquired Drop Down Assets  (c)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	17	
 	 	—	
 	 	17	
 	
Unrealized (loss) gain on derivatives, net	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(3	)	 	9	
 	 	—	
 	 	6	
 	
Capital contributions from NRG, non-cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	14	
 	 	—	
 	 	14	
 	
Distributions and return of capital to NRG, cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(395	)	 	(395	)	
Transfer of predecessors' equity to noncontrolling interest	—	
 	 	—	
 	 	—	
 	 	—	
 	 	3	
 	 	825	
 	 	(828	)	 	—	
 	
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	
 	 	$	—	
 	 	$	854	
 	 	$	—	
 	 	$	1,483	
 	
Net income	—	
 	 	—	
 	 	—	
 	 	16	
 	 	—	
 	 	48	
 	 	—	
 	 	64	
 	
Pre-acquisition net income of acquired Drop Down Assets  (c)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	35	
 	 	—	
 	 	35	
 	
Unrealized loss on derivatives, net of tax  (c)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(9	)	 	(52	)	 	—	
 	 	(61	)	
Payment for June 2014 Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(357	)	 	—	
 	 	(357	)	
Capital contributions from NRG, non-cash  (b)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	1,021	
 	 	—	
 	 	1,021	
 	
Distributions and returns of capital to NRG net of contributions, cash  (c)	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(288	)	 	—	
 	 	(288	)	
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	)	 	$	1,391	
 	 	$	—	
 	 	$	2,625	
 	
Net income	—	
 	 	—	
 	 	—	
 	 	33	
 	 	—	
 	 	42	
 	 	—	
 	 	75	
 	
Pre-acquisition net loss of acquired Drop Down Assets	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(20	)	 	—	
 	 	(20	)	
Unrealized loss on derivatives, net of tax	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(18	)	 	10	
 	 	—	
 	 	(8	)	
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	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(38	)	 	—	
 	 	(38	)	
Distributions and return of capital to NRG, net of contributions, non-cash	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(22	)	 	—	
 	 	(22	)	
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	)	 	$	791	
 	 	$	—	
 	 	$	2,632	

 	

(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.

75

                        

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:        

76

                        

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	 	48.95	%	 	122	
 	 	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	
 	 	 	 	482	
 	 	 	 	 	
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	

77

                        

 	
 	 	 	 	 	 	 	 	 	 	 	
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)	 	 	 	4,559	

 	

(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 three acquisitions of Drop Down Assets from NRG during the years ended December 31, 2015, and December 31, 2014, as follows:

78

                        

•	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.
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 $2 million is designated for current debt service payments, $7 million is designated to fund operating expenses and $2 million is designated for distributions to the Company, with the remaining $37 million restricted for reserves including debt service, performance obligations and other reserves as well as capital expenditures.
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

79

                        

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.
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.
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 $18 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.

80

                        

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.
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.

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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 $332 million, $212 million and $88 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.	
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.

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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 $39 million and $29 million as of December 31, 2015, and 2014, respectively. The Company records AROs as part of other non-current liabilities on its balance sheet.
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 nine 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.

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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.
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.

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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 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 $60 million and $64 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.

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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
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 Previously Reported	 	NRG Wind TE Holdco	 	As Currently Reported	
 	 	 	 	 	
Current assets	$	590	
 	(a) 	$	66	
 	 	$	656	
 	
Property, plant and equipment	4,466	
 	 	709	
 	 	5,175	
 	
Non-current assets	1,845	
 	(a)(b) 	184	
 	 	2,029	
 	
Total assets	6,901	
 	 	959	
 	 	7,860	

 	 	 	 	 	 	
Debt	4,723	
 	(b) 	198	
 	 	4,921	
 	
Other current and non-current liabilities	293	
 	 	21	
 	 	314	
 	
Total liabilities	5,016	
 	 	219	
 	 	5,235	
 	
Net assets	$	1,885	
 	 	$	740	
 	(c) 	$	2,625	

 	

(a)Retrospectively adjusted to reclassify deferred tax assets in accordance with ASU 2015-17, as further discussed in Note 2, Summary of Significant Accounting Policies.
(b) Retrospectively adjusted to reclassify deferred financing costs in accordance with ASU 2015-03, as further discussed in Note 2, Summary of Significant Accounting Policies.
(c)  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 Previously Reported	 	NRG Wind TE Holdco	 	As Currently Reported	
 	 	 	 	 	
Total operating revenues	$	689	
 	 	$	57	
 	 	$	746	
 	
Operating income	272	
 	 	(6	)	 	266	
 	
Net income	112	
 	 	(13	)	 	99	

 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31, 2013	
 	As Previously Reported	 	NRG Wind TE Holdco	 	As Currently Reported	
 	 	 	 	 	
Total operating revenues	$	379	
 	 	$	8	
 	 	$	387	
 	
Operating income	167	
 	 	(9	)	 	158	
 	
Net income	132	
 	 	(9	)	 	123	
 	
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	 	$	768	
 	
Net income	 	101	
 	
Since the acquisition date, the November 2015 Drop Down Assets contributed $14 million in operating revenues and $1 million in net income.

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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.
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	 	$	772	
 	
Net income	 	92	
 	
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.

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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.
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	$	5,597	
 	 	$	5,454	
 	 	2 - 40 Years	
Land and improvements	151	
 	 	150	
 	 	 	
Construction in progress	9	
 	 	9	
 	 	 	
Total property, plant and equipment	5,757	
 	 	5,613	
 	 	 	
Accumulated depreciation	(701	)	 	(438	)	 	 	
Net property, plant and equipment	$	5,056	
 	 	$	5,175	
 	 	 	
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	
CVSR	 	48.95%	 	101	
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 $17 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 $842 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.
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.
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.

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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)	
CVSR	 	 	 	 	 	
Operating revenues	$	83	
 	 	$	82	
 	 	$	47	
 	
Operating income	43	
 	 	40	
 	 	22	
 	
Net income	19	
 	 	17	
 	 	4	
 	
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)	
CVSR	 	 	 	 	
Current assets	$	98	
 	 	$	173	
 	
Non-current assets	917	
 	 	868	
 	
Current liabilities	33	
 	 	33	
 	
Non-current liabilities	775	
 	 	799	
 	
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	
 	 	 	
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.

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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	

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:

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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:

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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. 
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	17	
 	 	17	
 	 	21	
 	 	21	
 	
Liabilities:	 	 	 	 	 	 	 	
Long-term debt, including current portion	4,863	
 	 	4,745	
 	 	4,985	
 	 	5,071	
 	
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.
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.

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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.
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 $2.7 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

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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.
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	

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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	)	
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	$	(61	)	 	$	—	
 	 	$	(48	)	
Reclassified from accumulated OCL to income due to realization of previously deferred amounts	13	
 	 	13	
 	 	13	
 	
Mark-to-market of cash flow hedge accounting contracts	(21	)	 	(74	)	 	35	
 	
Accumulated OCL ending balance, net of income tax benefit of $16, $6 and $1, respectively	$	(69	)	 	$	(61	)	 	$	—	
 	
Accumulated OCL attributable to noncontrolling interests	(42	)	 	(52	)	 	—	
 	
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	$	13	

 	 	

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.

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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 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. 	

99

                        

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 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.

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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	
 	
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:	3,461	
 	 	4,159	
 	 	 	 	 	
Total debt	4,863	
 	 	4,985	
 	 	 	 	 	
Less current maturities	241	
 	 	224	
 	 	 	 	 	
Less deferred financing costs (e)	60	
 	 	64	
 	 	 	 	 	
Total long-term debt	$	4,562	
 	 	$	4,697	

 	

(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 .

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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 $842 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	

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.

102

                        

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 Senior Notes
On August 5, 2014, NRG Yield Operating LLC issued $500 million of senior unsecured notes, or the Senior Notes. The 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 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 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.
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.

103

                        

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.
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.
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.

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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	$	241	
 	
2017	252	
 	
2018	260	
 	
2019	927	
 	
2020	613	
 	
Thereafter	2,606	
 	
Total	$	4,899	
 	
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 .

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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 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.

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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.
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 common stock of $0.225 per unit payable to NRG on March 15, 2016.
During 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 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.
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).

107

                        

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	25%	 	18%	 	26%	 	9%	 	14%	 	4%	
PG&E	14%	 	3%	 	16%	 	4%	 	21%	 	7%	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

 	Year ended December 31, 2015	
(In millions)	Conventional Generation	
 	Renewables	
 	Thermal	
 	Corporate	
 	Total	
Operating revenues	$	336	
 	
 	$	359	
 	
 	$	174	
 	
 	$	—	
 	
 	$	869	
 	
Cost of operations	59	
 	 	127	
 	 	126	
 	
 	—	
 	
 	312	
 	
Depreciation and amortization	81	
 	
 	165	
 	
 	19	
 	
 	—	
 	
 	265	
 	
General and administrative	—	
 	
 	—	
 	
 	—	
 	
 	12	
 	
 	12	
 	
Acquisition-related transaction and integration costs	—	
 	 	—	
 	 	—	
 	 	3	
 	 	3	
 	
Operating income (loss)	196	
 	 	67	
 	 	29	
 	 	(15	)	 	277	
 	
Equity in earnings of unconsolidated affiliates	14	
 	
 	21	
 	
 	—	
 	
 	—	
 	
 	35	
 	
Other income, net	1	
 	 	1	
 	 	—	
 	 	—	
 	 	2	
 	
Loss on extinguishment of debt	(7	)	 	(2	)	 	—	
 	 	—	
 	 	(9	)	
Interest expense	(48	)	
 	(122	)	
 	(7	)	
 	(61	)	
 	(238	)	
Income (loss) before income taxes	156	
 	
 	(35	)	
 	22	
 	
 	(76	)	
 	67	
 	
Income tax expense	—	
 	
 	—	
 	
 	—	
 	
 	12	
 	
 	12	
 	
Net Income (Loss)	$	156	
 	
 	$	(35	)	
 	$	22	
 	
 	$	(88	)	
 	$	55	
 	
Balance Sheet	

 	

 	

 	

 	

Equity investment in affiliates	$	110	
 	
 	$	688	
 	
 	$	—	
 	
 	$	—	
 	
 	$	798	
 	
Capital expenditures (a)	4	
 	
 	6	
 	
 	20	
 	
 	—	
 	
 	30	
 	
Total Assets	$	2,102	
 	
 	$	5,056	
 	
 	$	428	
 	
 	$	189	
 	
 	$	7,775	

 	

(a)  Includes accruals.

 	Year ended December 31, 2014	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	317	
 	 	$	234	
 	 	$	195	
 	 	$	—	
 	 	$	746	
 	
Cost of operations	55	
 	 	72	
 	 	139	
 	 	—	
 	 	266	
 	
Depreciation and amortization	82	
 	 	102	
 	 	18	
 	 	—	
 	 	202	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	8	
 	 	8	
 	
Acquisition-related transaction and integration costs	—	
 	 	—	
 	 	—	
 	 	4	
 	 	4	
 	
Operating income (loss)	180	
 	 	60	
 	 	38	
 	 	(12	)	 	266	
 	
Equity in earnings of unconsolidated affiliates	14	
 	 	11	
 	 	—	
 	 	—	
 	 	25	
 	
Other income, net	—	
 	 	2	
 	 	—	
 	 	1	
 	 	3	
 	
Interest expense	(53	)	 	(101	)	 	(7	)	 	(30	)	 	(191	)	
Income (loss) before income taxes	141	
 	 	(28	)	 	31	
 	 	(41	)	 	103	
 	
Income tax expense	—	
 	 	—	
 	 	—	
 	 	4	
 	 	4	
 	
Net Income (Loss)	$	141	
 	 	$	(28	)	 	$	31	
 	 	$	(45	)	 	$	99	
 	
Balance Sheet	 	 	 	 	 	 	 	 	 	
Equity investments in affiliates	$	114	
 	 	$	296	
 	 	$	—	
 	 	$	—	
 	 	$	410	
 	
Capital expenditures (a)	6	
 	 	—	
 	 	7	
 	 	—	
 	 	13	
 	
Total Assets	$	2,169	
 	 	$	4,790	
 	 	$	436	
 	 	$	465	
 	 	$	7,860	

 	

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

108

                        

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31, 2013	
(In millions)	Conventional Generation	 	Renewables	 	Thermal	 	Corporate	 	Total	
Operating revenues	$	138	
 	 	$	97	
 	 	$	152	
 	 	$	—	
 	 	$	387	
 	
Cost of operations	23	
 	 	15	
 	 	110	
 	 	—	
 	 	148	
 	
Depreciation and amortization	20	
 	 	39	
 	 	15	
 	 	—	
 	 	74	
 	
General and administrative	—	
 	 	—	
 	 	—	
 	 	7	
 	 	7	
 	
Operating income (loss)	95	
 	 	43	
 	 	27	
 	 	(7	)	 	158	
 	
Equity in earnings of unconsolidated affiliates	16	
 	 	6	
 	 	—	
 	 	—	
 	 	22	
 	
Other income, net	1	
 	 	2	
 	 	—	
 	 	—	
 	 	3	
 	
Interest expense	(25	)	 	(20	)	 	(7	)	 	—	
 	 	(52	)	
Income (loss) before income taxes	87	
 	 	31	
 	 	20	
 	 	(7	)	 	131	
 	
Income tax expense	—	
 	 	—	
 	 	—	
 	 	8	
 	 	8	
 	
Net Income (Loss)	$	87	
 	 	$	31	
 	 	$	20	
 	 	$	(15	)	 	$	123	
 	
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	17.9	%	 	3.9	%	 	6.1	%	
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	67	
 	 	103	
 	 	131	
 	
Tax at 35%	23	
 	 	36	
 	 	46	
 	
State taxes, net of federal benefit	2	
 	 	1	
 	 	(6	)	
Investment tax credits	(1	)	 	—	
 	 	—	
 	
Impact of non-taxable partnership earnings	(11	)	 	(28	)	 	(32	)	
Production tax credits	(4	)	 	(6	)	 	—	
 	
Change in state effective tax rate	—	
 	 	1	
 	 	—	
 	
Other	3	
 	 	—	
 	 	—	
 	
Income tax expense	$	12	
 	 	$	4	
 	 	$	8	
 	
Effective income tax rate	17.9	%	 	3.9	%	 	6.1	%	

 	
 	
(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.

109

                        

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.
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

110

                        

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
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.

111

                        

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.
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.

112

                        

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 $9 million, $8 million and $2 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	$	12	
 	
2017	9	
 	
2018	9	
 	
2019	9	
 	
2020	8	
 	
Thereafter	135	
 	
Total	$	182	
 	
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
In the normal course of business, the Company is subject to various claims and litigations. Management expects that these various litigation items will not have a material adverse effect on the Company's results of operations or financial position.

113

                        

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,	 	September 30, (a)	 	June 30, (a)	 	March 31, (a)	
 	2015	
 	(In millions, except per share data)	
Operating Revenues	$	209	
 	 	$	225	
 	 	$	235	
 	 	$	200	
 	
(As previously reported)	 	 	 	 	 	 	 	
Operating Revenues	N/A	
 	 	209	
 	 	217	
 	 	180	
 	
Change	N/A	
 	 	16	
 	 	18	
 	 	20	

Operating Income	66	
 	 	80	
 	 	85	
 	 	46	
 	
(As previously reported)	 	 	 	 	 	 	 	
Operating Income	N/A	
 	 	86	
 	 	87	
 	 	48	
 	
Change	N/A	
 	 	(6	)	 	(2	)	 	(2	)	
 	 	 	 	 	 	 	 	
Net Income (Loss)	13	
 	 	24	
 	 	38	
 	 	(20	)	
(As previously reported)	 	 	 	 	 	 	 	
Net Income (Loss)	N/A	
 	 	34	
 	 	41	
 	 	(16	)	
Change	N/A	
 	 	(10	)	 	(3	)	 	(4	)	
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	)	

 	
 	
(a) The Company's unaudited quarterly financial data was recast for the effect of the November 2015 Drop Down Assets.

114

                        

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Quarter Ended	
 	December 31, (a)	 	September 30, (a)	 	June 30, (a)	 	March 31, (a)	
 	2014	
 	(In millions, except per share data)	
Operating Revenues	$	212	
 	 	$	199	
 	 	$	194	
 	 	$	141	
 	
(As previously reported)	 	 	 	 	 	 	 	
Operating Revenues	192	
 	 	184	
 	 	173	
 	 	140	
 	
Change	20	
 	 	15	
 	 	21	
 	 	1	

 	 	 	 	 	 	 	 	
Operating Income	71	
 	 	84	
 	 	60	
 	 	51	
 	
(As previously reported)	 	 	 	 	 	 	 	
Operating Income	70	
 	 	84	
 	 	64	
 	 	54	
 	
Change	1	
 	 	—	
 	 	(4	)	 	(3	)	

Net Income	4	
 	 	37	
 	 	35	
 	 	23	
 	
(As previously reported)	 	 	 	 	 	 	 	
Net Income	5	
 	 	40	
 	 	41	
 	 	26	
 	
(Change)	(1	)	 	(3	)	 	(6	)	 	(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 November 2015 Drop Down Assets.

115

                        

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

 	 	 	 	 	 	 	 	 	 	 	 	
 	Year ended December 31,	
(In millions)	2015	 	2014 (a)	 	2013 (a)	
 	 	 	 	 	 	
Total operating expense	$	2	
 	 	$	—	
 	 	$	—	
 	
Equity earnings in consolidated subsidiaries	78	
 	 	108	
 	 	77	
 	
Interest expense	(9	)	 	(5	)	 	—	
 	
Total other income, net	69	
 	 	103	
 	 	77	
 	
Income Before Income Taxes	67	
 	 	103	
 	 	77	
 	
Income tax expense	12	
 	 	4	
 	 	8	
 	
Net Income	55	
 	 	99	
 	 	69	
 	
Less: Net income attributable to noncontrolling interests	42	
 	 	48	
 	 	42	
 	
Less: Pre-acquisition net (loss) income of Drop Down Assets	(20	)	 	35	
 	 	14	
 	
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.

116

                        

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

 	Year ended December 31,	
 	2015	 	2014 (a)	
 	(In millions)	
Assets	 	 	 	
Current Assets:	 	 	 	
Cash and cash equivalents	$	1	
 	 	$	—	
 	
Noncurrent Assets:	 	 	 	
Investment in consolidated subsidiaries	2,434	
 	 	2,475	
 	
Note receivable - Yield Operating	618	
 	 	337	
 	
Deferred income taxes	170	
 	 	134	
 	
Total Assets	3,223	
 	 	2,946	

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	791	
 	 	1,391	
 	
Total Stockholders' Equity	2,632	
 	 	2,625	
 	
Total Liabilities and Stockholders' Equity	$	3,223	
 	 	$	2,946	

 	

(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.

117

                        

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

 	 	 	 	 	 	 	 	 	 	 	 	
 	Years ended December 31,	
 	2015	 	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.

118

                        

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 November 2015 Drop Down Assets from the date these entities were under common control, the majority of which were acquired on April 1, 2014.
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.

119

                        

EXHIBIT INDEX

Number	 	Description	 	Method of Filing	
2.1	 	Purchase and Sale Agreement, dated as of May 5, 2014, by and between NRG Gas Development Company, LLC and NRG Yield Operating LLC.	 	Incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on May 9, 2014.	
2.2	 	Purchase and Sale Agreement, dated as of May 5, 2014, by and between NRG Solar PV LLC and NRG Yield Operating LLC.	 	Incorporated herein by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on May 9, 2014.	
2.3	 	Purchase and Sale Agreement, dated as of May 5, 2014, by and between NRG Solar PV LLC and NRG Yield Operating LLC.	 	Incorporated herein by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K filed on May 9, 2014.	
2.4	 	Purchase and Sale Agreement, dated June 3, 2014, by and among NRG Yield, Inc., NRG Yield Operating LLC, Terra-Gen Finance Company, LLC, NTD AWAM Holdings, LLC, CHIPS Alta Wind X Holding Company, LLC and CHIPS Alta Wind XI Holding Company, LLC.	 	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 9, 2014.	
2.5	 	Purchase and Sale Agreement, dated as of November 4, 2014, by and between NRG Wind LLC and NRG Yield Operating LLC.	 	Incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on November 7, 2014.	
2.6	 	Purchase and Sale Agreement, dated as of November 4, 2014, by and between NRG Arroyo Nogales LLC and NRG Yield Operating LLC.	 	Incorporated herein by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on November 7, 2014.	
2.7*^	 	Purchase and Sale Agreement, dated as of June 17, 2015, by and between EFS Desert Sun, LLC and NRG Yield Operating LLC.	 	Incorporated herein by reference to Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q filed on August 4, 2015.	
2.8	 	Purchase and Sale Agreement, dated as of September 17, 2015, by and between NRG Energy Gas & Wind Holdings, Inc. and NRG Yield Operating LLC.
	 	Incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on September 21, 2015.
	
3.1	 	Second Amended and Restated Certificate of Incorporation of NRG Yield, Inc., dated as of May 14, 2015.	 	Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 15, 2015.	
3.2	 	Certificate of Correction to Second Amended and Restated Certificate of Incorporation of NRG Yield, Inc., dated as of June 9, 2015.	 	Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on June 9, 2015.	
3.3	 	Certificate of Correction to Second Amended and Restated Certificate of Incorporation of NRG Yield, Inc., dated as of February 23, 2016.	 	Filed herewith.	
3.4	 	Third Amended and Restated Bylaws of NRG Yield, Inc., dated as of February 23, 2016.	 	Filed herewith.	
4.1	 	Third Amended and Restated Limited Liability Company Agreement of NRG Yield LLC, dated as of May 14, 2015.	 	Incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on May 15, 2015.	
4.2	 	Indenture, dated February 11, 2014, among NRG Yield, Inc., NRG Yield Operating LLC and NRG Yield LLC, as Guarantors, and Wilmington Trust, National Association, as trustee, re: the Company’s 3.50% Convertible Senior Notes due 2019.	 	Incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 11, 2014.	
4.3	 	Form of 3.50% Convertible Senior Note due 2019.	 	Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 11, 2014.	
4.4	 	Indenture, dated August 5, 2014, among NRG Yield Operating LLC, the guarantors named therein and Law Debenture Trust Company of New York, as trustee.	 	Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on August 5, 2014.	
4.5	 	Form of 5.375% Senior Note due 2024.	 	Incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on August 5, 2014.	

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4.6	 	Registration Rights Agreement, dated August 5, 2014, among NRG Yield Operating LLC, the guarantors named therein and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the initial purchasers.	 	Incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on August 5, 2014.	
4.7	 	Supplemental Indenture, dated as of November 7, 2014, among NRG Yield Operating LLC, the guarantors named therein and Law Debenture Trust Company of New York.	 	Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on November 13, 2014.	
4.8	 	Supplemental Indenture, dated as of February 25, 2015, among NRG Yield Operating LLC, the guarantors named therein and Law Debenture Trust Company of New York.	 	Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on February 27, 2015.	
4.9	 	Supplemental Indenture, dated as of April 10, 2015, among NRG Yield Operating LLC, NRG Yield LLC, the other guarantors named therein and Law Debenture Trust Company of New York.	 	Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on April 16, 2015.	
4.10	 	Fourth Supplemental Indenture, dated as of May 8, 2015, among NRG Yield Operating LLC, the guarantors named therein and Law Debenture Trust Company of New York.	 	Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on May 8, 2015.	
4.11	 	Indenture, dated June 29, 2015, among NRG Yield, Inc., NRG Yield Operating LLC and NRG Yield LLC, as Guarantors, and Wilmington Trust, National Association, as Trustee.	 	Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 29, 2015.	
4.12	 	Form of 3.25% Convertible Senior Note due 2020.
	 	Incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on June 29, 2015 .	
4.13	 	Specimen Class A Common Stock Certificate.	 	Incorporated herein by reference to Exhibit 4.1 to the Company's Registration Statement on Form 8-A/A filed on May 8, 2015.	
4.14	 	Specimen Class C Common Stock Certificate.	 	Incorporated herein by reference to Exhibit 4.2 to the Company's Registration Statement on Form 8-A/A filed on May 8, 2015.	
10.1	 	Amended and Restated Registration Rights Agreement, dated as of May 14, 2015, by and between NRG Energy, Inc. and NRG Yield, Inc.	 	Incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on May 15, 2015.	
10.2	 	Amended and Restated Exchange Agreement, dated as of May 14, 2015, by and among NRG Energy, Inc., NRG Yield, Inc. and NRG Yield LLC.	 	Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 15, 2015.	
10.3	 	Amended and Restated Right of First Offer Agreement, dated as of March 12, 2015, by and between NRG Energy, Inc. and NRG Yield, Inc.	 	Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 12, 2015.	
10.4	 	Management Services Agreement, dated as of July 22, 2013, by and between NRG Energy, Inc., NRG Yield, Inc., NRG Yield LLC and NRG Yield Operating LLC.	 	Incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on July 26, 2013.	
10.5	 	Trademark License Agreement, dated as of July 22, 2013, by and between NRG Energy, Inc. and NRG Yield, Inc.	 	Incorporated herein by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed on July 26, 2013.	
10.6	 	Loan Guarantee Agreement, dated as of September 30, 2011, by and among High Plains Ranch II, LLC, as borrower, the U.S. Department of Energy, as guarantor, and the U.S. Department of Energy, as loan servicer.	 	Incorporated herein by reference to Exhibit 10.8 to the Company's Draft Registration Statement on Form S-1, filed on February 13, 2013.	
10.7	 	Operation and Maintenance Agreement, dated as of January 31, 2011, by and among Avenal Solar Holdings LLC and NRG Energy Services LLC.	 	Incorporated herein by reference to Exhibit 10.11 to the Company's Draft Registration Statement on Form S-1filed on February 13, 2013.	
10.8	 	Asset Management Agreement, dated as of August 30, 2012, by and among NRG Solar Avra Valley LLC and NRG Solar Asset Management LLC.	 	Incorporated herein by reference to Exhibit 10.12 to the Company's Draft Registration Statement on Form S-1 filed on February 13, 2013.	
10.9	 	Operation and Maintenance Agreement, dated as of August 1, 2012, by and among NRG Energy Services LLC and NRG Solar Borrego I LLC.	 	Incorporated herein by reference to Exhibit 10.13 to the Company's Draft Registration Statement on Form S-1 filed on February 13, 2013.	
10.10	 	Asset Management Agreement, dated as of March 15, 2012, by and among NRG Solar Alpine LLC and NRG Solar Asset Management LLC.	 	Incorporated herein by reference to Exhibit 10.14 to the Company's Draft Registration Statement on Form S-1 filed on February 13, 2013.	
10.11	 	Operation and Maintenance Agreement, dated as of September 30, 2011, by and among NRG Energy Services LLC and High Plains Ranch II, LLC.	 	Incorporated herein by reference to Exhibit 10.15 to the Company's Draft Registration Statement on Form S-1 filed on February 13, 2013.	

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10.12	 	Project Administration Agreement, dated as of August 16, 2010, by and among South Trent Wind LLC and NRG Texas Power LLC.	 	Incorporated herein by reference to Exhibit 10.16 to the Company's Draft Registration Statement on Form S-1 filed on February 13, 2013.	
10.13	 	Operation and Maintenance Agreement, dated as of April 24, 2009, by and among GenConn Devon LLC and Devon Power LLC.	 	Incorporated herein by reference to Exhibit 10.15 to the Company's Registration Statement on Form S-1 filed on June 7, 2013.	
10.14	 	Operation and Maintenance Agreement, dated as of April 24, 2009, by and among GenConn Middletown LLC and Middletown Power LLC.	 	Incorporated herein by reference to Exhibit 10.16 to the Company's Registration Statement on Form S-1 filed on June 7, 2013.	
10.15	 	Administrative Services Agreement, dated as of April 2, 2009, by and among GenOn Energy Services, LLC (formerly Mirant Services, LLC) and NRG Marsh Landing, LLC (formerly Mirant Marsh Landing, LLC.	 	Incorporated herein by reference to Exhibit 10.17 to the Company's Registration Statement on Form S-1 filed on June 7, 2013.	
10.16†	 	NRG Yield, Inc. Amended and Restated 2013 Equity Incentive Plan, dated as of May 14, 2015.	 	Incorporated herein by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed on May 15, 2015.	
10.17	 	Form of Indemnification Agreement.	 	Incorporated herein by reference to Exhibit 10.20 to the Company's Registration Statement on Form S-1/A filed on June 21, 2013.	
10.18.1	 	Amended and Restated Credit Agreement, dated April 25, 2014, by and among NRG Yield Operating LLC, NRG Yield LLC, Royal Bank of Canada, as Administrative Agent, the lenders party thereto, Royal Bank of Canada, Goldman Sachs Bank USA and Bank of America, N.A., as L/C Issuers and RBC Capital Markets as Sole Left Lead Arranger and Sole Left Lead Book Runner.	 	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 28, 2014.	
10.18.2	 	First Amendment to Amended & Restated Credit Agreement, dated June 26, 2015, by and among NRG Yield Operating LLC, NRG Yield LLC, Royal Bank of Canada and the Lenders party thereto.
	 	Incorporated herein by reference to Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q filed on August 4, 2015.
	
10.19.1	 	Credit Agreement, dated as of August 23, 2011, among NRG West Holdings LLC, ING Capital LLC, Union Bank, N.A., Mizuho Corporate Bank, Ltd., RBS Securities Inc., Credit Agricole Corporate and Investment Bank, and each of lenders and issuing banks thereto.*	 	Incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2014.	
10.19.2	 	Amendment No. 1 to the Credit Agreement, dated October 7, 2011, by and between NRG West Holdings LLC and Credit Agricole Corporate and Investment Bank.	 	Incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2014.	
10.19.3	 	Amendment No. 2 to the Credit Agreement, dated February 29, 2012, by and between NRG West Holdings LLC and Credit Agricole Corporate and Investment Bank.	 	Incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2014.	
10.19.4	 	Amendment No. 3 to the Credit Agreement, dated as of January 27, 2014, by and between NRG West Holdings LLC and Credit Agricole Corporate and Investment Bank.	 	Incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q filed on August 4, 2015.	
10.19.5	 	Amendment No. 4 to the Credit Agreement and Amendment No. 1 to the Collateral Agreement, dated as of May 16, 2014, by and between NRG West Holdings LLC, El Segundo Energy Center LLC and Credit Agricole Corporate and Investment Bank.	 	Incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q filed on August 4, 2015.
	
10.19.6	 	Amendment No. 5 to the Credit Agreement, dated as of May 29, 2015, by and between NRG West Holdings LLC and ING Capital LLC.
	 	Incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q filed on August 4, 2015.
	
10.20.1	 	Amended and Restated Credit Agreement, dated July 17, 2014, by and among NRG Marsh Landing LLC, The Royal Bank of Scotland Plc, Deutsche Bank Trust Company Americas and the lenders party thereto.	 	Incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2014.	
10.20.2	 	First Amendment to the Credit Agreement and Collateral Agency and Intercreditor Agreement, dated July 17, 2014, by and among NRG Marsh Landing LLC, The Royal Bank of Scotland Plc, Deutsche Bank Trust Company Americas and the lenders party thereto.	 	Incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q filed on August 7, 2014.	
10.21^	 	Amended and Restated Limited Liability Company Agreement of NRG RPV Holdco 1 LLC, dated as of April 9, 2015.
	 	Incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 4, 2015.	
10.22^	 	Amended and Restated Limited Liability Company Agreement of NRG DGPV Holdco 1 LLC, dated as of May 8, 2015.
	 	Incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on August 4, 2015.	

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21.1	 	Subsidiaries of NRG Yield, Inc.	 	Filed herewith.	
23.1	 	Consent of KPMG LLP.	 	Filed herewith.	
31.1	 	Rule 13a-14(a)/15d-14(a) certification of Mauricio Gutierrez.	 	Filed herewith.	
31.2	 	Rule 13a-14(a)/15d-14(a) certification of Kirkland B. Andrews.	 	Filed herewith.	
31.3	 	Rule 13a-14(a)/15d-14(a) certification of David Callen.	 	Filed herewith.	
32	 	Section 1350 Certification.	 	Filed herewith.	
101 INS	 	XBRL Instance Document.	 	Filed herewith.	
101 SCH	 	XBRL Taxonomy Extension Schema.	 	Filed herewith.	
101 CAL	 	XBRL Taxonomy Extension Calculation Linkbase.	 	Filed herewith.	
101 DEF	 	XBRL Taxonomy Extension Definition Linkbase.	 	Filed herewith.	
101 LAB	 	XBRL Taxonomy Extension Label Linkbase.	 	Filed herewith.	
101 PRE	 	XBRL Taxonomy Extension Presentation Linkbase.	 	Filed herewith.	

 	
 	 	 	
†	 	Indicates exhibits that constitute compensatory plans or arrangements.	
*	 	This filing excludes schedules pursuant to Item 601(b)(2) of Regulation S-K, which the registrant agrees to furnish supplementary to the Securities and Exchange Commission upon request by the Commission.	
^	 	Portions of this exhibit have been redacted and are subject to a confidential treatment request filed with the Secretary of the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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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 thereunto duly authorized.

 	NRG YIELD, INC.
(Registrant) 	 	
 	 	 	
 	/s/ MAURICIO GUTIERREZ	 	
 	Mauricio Gutierrez	 	
 	Interim Chief Executive Officer
(Principal Executive Officer) 	 	
 	
Date: February 29, 2016	 	 	

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POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints David R. Hill and Brian E. Curci, each or any of them, such person's true and lawful attorney-in-fact and agent with full power of substitution and resubstitution for such person and in such person's name, place and stead, in any and all capacities, to sign any and all amendments to this report on Form 10-K, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as such person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant in the capacities indicated on February 29, 2016.

Signature	 	Title	 	Date	 	
/s/ MAURICIO GUTIERREZ  	 	Interim President and Chief Executive Officer	 	February 29, 2016	 	
Mauricio Gutierrez	 	(Principal Executive Officer)	 	 	 	
/s/ KIRKLAND B. ANDREWS 	 	Chief Financial Officer and Director	 	February 29, 2016	 	
Kirkland B. Andrews	 	(Principal Financial Officer)	 	 	 	
/s/ DAVID CALLEN 	 	Chief Accounting Officer	 	February 29, 2016	 	
David Callen	 	(Principal Accounting Officer)	 	 	 	
/s/ JOHN CHLEBOWSKI	 	Chairman of the Board	 	February 29, 2016	 	
John Chlebowski	 	 	 	 	 	 	
/s/ BRIAN FORD	 	Director	 	February 29, 2016	 	 	
Brian Ford	 	 	 	 	 	 	 	
/s/ FERRELL MCCLEAN  	 	Director	 	February 29, 2016	 	 	 	
Ferrell McClean	 	 	 	 	 	 	 	 	
/s/ CHRISTOPHER SOTOS	 	Director	 	February 29, 2016	 	 	 	 	
Christopher Sotos	 	 	 	 	 	 	 	 	

125

Exhibit 3.3

CERTIFICATE OF CORRECTION

OF

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

NRG YIELD, INC.

NRG Yield, Inc., a Delaware corporation (the “Corporation”), hereby certifies, pursuant to Section 103 of the Delaware General Corporation Law (the “DGCL”), as follows:
1. The Corporation filed a Second Amended and Restated Certificate of Incorporation with the Office of the Secretary of State of the State of Delaware on May 14, 2015 (the “Certificate of Incorporation”) and the Certificate of Incorporation requires correction as permitted by Section 103(f) of the DGCL.
2. Article SIX of the Certificate of Incorporation is an inaccurate record of the corporate action referred to therein because the words “votes entitled to be cast by all” were omitted from Article SIX. Article SIX of the Certificate of Incorporation is hereby corrected to read in its entirety as follows:

Except as provided by this Certificate and any duly authorized certificate of designation of any series of Preferred Stock, each director shall be elected by the vote of a plurality of the votes entitled to be cast by all shares of Common Stock entitled to vote on the election of directors voting as a single class and represented in person or by proxy at any meeting for the election of directors at which a quorum is present.

3. Article TEN of the Certificate of Incorporation is an inaccurate record of the corporate action referred to therein because (i) the word “by” and the words “votes entitled to be cast by all” were omitted from the first sentence of Section 1 of Article TEN and (ii) the words “votes entitled to be cast by all” were omitted from the second sentence of Section 1 of Article TEN. The first and second sentences of Section 1 of Article TEN of the Certificate of Incorporation are hereby corrected to read in their entirety as follows:

Subject to the rights, if any, of the holders of any series of Preferred Stock to remove directors (with or without cause) and fill the vacancies thereby created (as specified in any duly authorized certificate of designation of any series of Preferred Stock), no director may be removed from office except for cause and  by  the affirmative vote of the holders of a majority of the votes entitled to be cast by all shares of Common Stock then outstanding voting as a single class. Notwithstanding the foregoing, if the holders of any class or series of capital stock are entitled by the provisions of this Certificate (including any duly authorized certificate of designation of any series of Preferred Stock) to elect one or more directors, such director or directors so elected may be removed with or without cause by the vote of the holders of a majority of the votes entitled to be cast by all outstanding shares of that class or series entitled to vote.

[Signature page follows]

In witness whereof, the Corporation has caused this certificate to be signed by its duly authorized officer on the date set forth below.

 	 	
NRG YIELD, INC.	
 	 	
By:	/s/ Brian Curci	
Name:	Brian Curci	
Title:	Corporate Secretary	
 	 	
Date:	2/23/2016	

 	 	

    

Exhibit 3.4
THIRD AMENDED AND RESTATED
BYLAWS
OF
NRG YIELD, INC.
A Delaware Corporation
(Amended and Restated as of February 23, 2016)
ARTICLE I
OFFICES
Section 1.    Registered Office. The registered office of NRG Yield, Inc. (the “Corporation”) in the State of Delaware shall be located at 1209 Orange Street, Wilmington, DE 19801. The name of the Corporation’s registered agent at such address shall be The Corporation Trust Company. The registered office and/or registered agent of the Corporation may be changed from time to time by action of the board of directors.
Section 2.    Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors of the Corporation (the “ Board of Directors ”) may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1.    Annual Meeting. An annual meeting of the stockholders shall be held at such date and time specified by the Board of Directors for the purpose of electing directors and conducting such other proper business as may come before the annual meeting. At the annual meeting, stockholders shall elect directors and transact such other business as properly may be brought before the annual meeting pursuant to  Section 11  of this ARTICLE II.
Section 2.    Special Meetings. Subject to the rights of the holders of any class or series of preferred stock of the Corporation, special meetings of the stockholders may only be called in the manner provided in the certificate of incorporation of the Corporation, as amended and restated from time to time (the “ Certificate of Incorporation ”).
Section 3.    Place of Meetings. The Board of Directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal executive office of the Corporation. If for any reason any annual meeting shall not be held during any year, the business thereof may be transacted at any special meeting of the stockholders.
Section 4.    Notice. Whenever stockholders are required or permitted to take action at a meeting, written or printed notice stating the place, date, time and, in the case of special meetings, the purpose or purposes, of such meeting, shall be given to each stockholder entitled to vote on the record date, determined in accordance with the provisions of  Section 3  of ARTICLE VI hereof. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the stockholder at his, her or its address as the same appears on the records of the Corporation. An affidavit of the secretary or an assistant secretary or of the transfer agent of the Corporation that the notice required by this  Section 4  has been given shall, in the absence of fraud, be  prima facie  evidence of the facts stated therein. Whenever the giving of any notice to stockholders is required by applicable law, the Certificate of Incorporation or these Bylaws, a waiver thereof, given by the person entitled to said notice, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting

    1

of the stockholders need be specified in any waiver of notice unless so required by applicable law, the Certificate of Incorporation or these Bylaws.
Section 5.    Stockholders List. The officer having charge of the stock ledger of the Corporation shall make, at least 10 days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at such meeting arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, the stockholder’s agent or attorney, at the stockholder’s expense, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting, (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list shall be provided with the notice of the meeting or (ii) during ordinary business hours, at the principal place of business of the Corporation. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Except as provided by applicable law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 6.    Quorum. The holders of a majority in voting power of the outstanding shares of capital stock entitled to vote at the meeting of stockholders, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders, except as otherwise provided by the Delaware General Corporation Law (“ DGCL ”) or by the Certificate of Incorporation. If a quorum is not present, the holders of a majority in voting power of the shares present in person or represented by proxy at the meeting, and entitled to vote at the meeting, may adjourn the meeting to another time and/or place. When a specified item of business requires a vote by the holders of a class or series of shares of capital stock (if the Corporation shall then have outstanding shares of more than one class or series) voting as a class or series, the holders of a majority in voting power of the shares of such class or series shall constitute a quorum (as to such class or series) for the transaction of such item of business, except as otherwise provided by the DGCL or by the Certificate of Incorporation.
Section 7.    Adjourned Meetings. When a meeting is adjourned to another time and place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
Section 8.    Vote Required. When a quorum is present, the affirmative vote of the majority in voting power of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless (i) by express provisions of an applicable law, the rules and regulations of any stock exchange applicable to the Corporation, or of the Certificate of Incorporation a different vote is required, in which case such express provision shall govern and control the decision of such question, or (ii) the subject matter is the election of directors, in which case the Certificate of Incorporation shall govern and control the approval of such subject matter.
Section 9.    Voting Rights. Except as otherwise provided by the DGCL, the Certificate of Incorporation or these Bylaws, every stockholder entitled to vote at any meeting of stockholders shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of capital stock held by such stockholder which has voting power upon the matter in question.
Section 10.    Proxies. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. Any proxy is suspended when the person executing the proxy is present at a meeting of stockholders and elects to vote, except that when such proxy is coupled with an interest and the fact of the interest appears on the face of the proxy, the agent named in the proxy shall have all voting and other

    2

rights referred to in the proxy, notwithstanding the presence of the person executing the proxy. At each meeting of the stockholders, and before any voting commences, all proxies filed at or before the meeting shall be submitted to and examined by the secretary or a person designated by the secretary, and no shares may be represented or voted under a proxy that has been found to be invalid or irregular.
Section 11.    Business Brought Before a Meeting of the Stockholders.
(A)    Annual Meetings.
(1)    At an annual meeting of the stockholders, only such nominations of persons for election to the Board of Directors shall be considered and such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, nominations and other business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) brought before the meeting by or at the direction of the Board of Directors or (c) otherwise properly brought before the meeting by a stockholder who (i) is a stockholder of record of the Corporation (and, with respect to any beneficial owner, if different, on whose behalf such business is proposed or such nomination or nominations are made, only if such beneficial owner is the beneficial owner of shares of the Corporation) both at the time the notice provided for in paragraph (A) of this  Section 11  is delivered to the secretary of the Corporation and on the record date for the determination of stockholders entitled to vote at the annual meeting of stockholders, (ii) is entitled to vote at the meeting, and (iii) complies with the notice procedures set forth in paragraph (A) of this  Section 11 . For nominations or other business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing and in proper form to the secretary of the Corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting ( provided ,  however , that in the event that the date of the annual meeting is advanced more than thirty (30) days before or delayed more than seventy (70) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation). In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Notwithstanding anything in this paragraph to the contrary, in the event that the number of directors to be elected to the Board of Directors at an annual meeting is increased and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by paragraph (A) of this  Section 11  shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
(2)    A stockholder’s notice providing for the nomination of a person or persons for election as a director or directors of the Corporation shall set forth (a) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made (and for purposes of clauses (ii) through (ix) below, including any interests described therein held by any affiliates or associates (each within the meaning of Rule 12b-2 under the Securities Exchange Act of 1934 (the “ Exchange Act ”) for purposes of these Bylaws) of such stockholder or beneficial owner or by any member of such stockholder’s or beneficial owner’s immediate family sharing the same household, in each case as of the date of such stockholder’s notice, which information shall be confirmed or updated, if necessary, by such stockholder and beneficial owner (x) not later than ten (10) days after the record date for the notice of the meeting to disclose such ownership as of the record date for the notice of the meeting, and (y) not later than eight (8) business days before the meeting or any adjournment or postponement thereof to disclose such ownership as of the date that is ten (10) business before the meeting or any adjournment or postponement thereof (or if not practicable to provide such updated information not later than eight (8) business days before any adjournment or postponement, on the first practicable date before any such adjournment or postponement)) (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (ii) the class or series and number of shares of capital stock of the Corporation which are, directly or indirectly, beneficially owned (within the meaning of Rule

    3

13d-3 under the Exchange Act) (provided that a person shall in all events be deemed to beneficially own any shares of any class or series and number of shares of capital stock of the Corporation as to which such person has a right to acquire beneficial ownership at any time in the future) and owned of record by such stockholder or beneficial owner, (iii) the class or series, if any, and number of options, warrants, puts, calls, convertible securities, stock appreciation rights, or similar rights, obligations or commitments with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares or other securities of the Corporation or with a value derived in whole or in part from the value of any class or series of shares or other securities of the Corporation, whether or not such instrument, right, obligation or commitment shall be subject to in the underlying class or series of shares or other securities of the Corporation (each a “ Derivative Security ”), which are, directly or indirectly, beneficially owned by such stockholder or beneficial owner, (iv) any agreement, arrangement, understanding, or relationship, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such stockholder or beneficial owner, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of capital stock or other securities of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder or beneficial owner with respect to any class or series of capital stock or other securities of the Corporation, or that provides, directly or indirectly, the opportunity to profit from any decrease in the price or value of any class or series of capital stock or other securities of the Corporation, (v) a description of any other direct or indirect opportunity to profit or share in any profit (including any performance-based fees) derived from any increase or decrease in the value of shares or other securities of the Corporation, (vi) any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or beneficial owner has a right to vote any shares or other securities of the Corporation, (vii) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder or such beneficial owner that are separated or separable from the underlying shares of the Corporation, (viii) any proportionate interest in shares of the Corporation or Derivative Securities held, directly or indirectly, by a general or limited partnership in which such stockholder or beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, if any, (ix) a description of all agreements, arrangements, and understandings between such stockholder or beneficial owner and any other person(s) (including their name(s)) in connection with or related to the ownership or voting of capital stock of the Corporation or Derivative Securities, (x) any other information relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (xi) a statement as to whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares required under applicable law to elect such stockholder’s nominees and/or otherwise to solicit proxies from the stockholders in support of such nomination and (xii) a representation that the stockholder is a holder of record of shares of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination, and (b) as to each person whom the stockholder proposes to nominate for election or reelection as a director, (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (ii) a description of all direct and indirect compensation and other material agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder or beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant, (iii) a completed and signed questionnaire regarding the background and qualifications of such person to serve as a director, a copy of which may be obtained upon request to the Secretary of the Corporation, (iv) all information with respect to such person that would be required to be set forth in a stockholder’s notice pursuant to this  Section 11  if such person were a stockholder or beneficial owner, on whose behalf the nomination was made, submitting a notice providing for the nomination of a person or persons for election as a director or directors of the Corporation in accordance with this  Section 11 , and (v) such additional information that the Corporation may reasonably request to determine the eligibility or qualifications of such person to serve as a director or an independent director of the Corporation, or that could be material to a

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reasonable stockholder’s understanding of the qualifications and/or independence, or lack thereof, of such nominee as a director.
(3)    A stockholder’s notice regarding business proposed to be brought before a meeting of stockholders other than the nomination of persons for election to the Board of Directors shall set forth (a) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is made, the information called for by clauses (a)(ii) through (a)(ix) of the immediately preceding paragraph (2) (including any interests described therein held by any affiliates or associates of such stockholder or beneficial owner or by any member of such stockholder’s or beneficial owner’s immediate family sharing the same household, in each case as of the date of such stockholder’s notice, which information shall be confirmed or updated, if necessary, by such stockholder and beneficial owner (x) not later than ten (10) days after the record date for the notice of the meeting to disclose such ownership as of the record date for the notice of the meeting, and (y) not later than eight (8) business days before the meeting or any adjournment or postponement thereof to disclose such ownership as of the date that is ten (10) business before the meeting or any adjournment or postponement thereof (or if not practicable to provide such updated information not later than eight (8) business days before any adjournment or postponement, on the first practicable date before any such adjournment or postponement)), (b) a brief description of (i) the business desired to be brought before such meeting, (ii) the reasons for conducting such business at the meeting and (iii) any material interest of such stockholder or beneficial owner in such business, including a description of all agreements, arrangements and understandings between such stockholder or beneficial owner and any other person(s) (including the name(s) of such other person(s)) in connection with or related to the proposal of such business by the stockholder, (c) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the nomination is made, (i) a statement as to whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares required under applicable law to approve the proposal and/or otherwise to solicit proxies from stockholders in support of such proposal and (ii) any other information relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (d) if the matter such stockholder proposes to bring before any meeting of stockholders involves an amendment to the Corporation’s Bylaws, the specific wording of such proposed amendment, (e) a representation that the stockholder is a holder of record of shares of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business and (f) such additional information that the Corporation may reasonably request regarding such stockholder or beneficial owner, if any, and/or the business that such stockholder proposes to bring before the meeting. The foregoing notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the Corporation of his or her intention to present a proposal at an annual meeting in compliance with Rule 14a-8 (or any successor thereof) promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting.
(4)    Notwithstanding anything in these Bylaws to the contrary, only such persons who are nominated in accordance with the procedures set forth in paragraph (A) of this  Section 11  shall be eligible to be elected at an annual meeting to serve as directors and no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this  Section 11 . The presiding officer of an annual meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not properly made or any business was not properly brought before the meeting, as the case may be, in accordance with the provisions of this  Section 11 ; if he or she should so determine, he or she shall so declare to the meeting and any such nomination not properly made or any business not properly brought before the meeting, as the case may be, shall not be transacted.
(B)    Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (a) is a stockholder of record of the Corporation (and, with respect to any beneficial owner, if different, on whose behalf such nomination or nominations are made, only if such beneficial owner is the beneficial owner of shares of the Corporation) both at the time the notice provided for in paragraph (B) of this  Section 11  is

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delivered to the Corporation’s secretary and on the record date for the determination of stockholders entitled to vote at the special meeting, (b) is entitled to vote at the meeting and upon such election, and (c) complies with the notice procedures set forth in the third sentence of paragraph (B) of this  Section 11 . In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (A)(2) of this  Section 11 shall be delivered to the Corporation’s secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(C)    General.
(1)    Only such persons who are nominated in accordance with the procedures set forth in this Section 11 shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this  Section 11 . Notwithstanding the foregoing provisions of this  Section 11 , if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.
(2)    For purposes of this section, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed or furnished by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3)    Notwithstanding the foregoing provisions of this Section 11, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11 .
(4)    Nothing in this section shall be deemed to (a) affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act, (b) confer upon any stockholder a right to have a nominee or any proposed business included in the Corporation’s proxy statement, or (c) affect any rights of the holders of any series of preferred stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.
Section 12.    Voting Procedures and Inspectors of Election at Meetings of Stockholders. The Board of Directors, in advance of any meeting of stockholders, may, and shall if required by applicable law, appoint one or more inspectors, who may be employees of the Corporation, to act at the meeting and make a written report thereof. The Board of Directors may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting, the person presiding at the meeting may, and shall if required by applicable law, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall (a) ascertain the number of shares outstanding and the voting power of each, (b) determine the shares represented at the meeting and the validity of proxies and ballots, (c) count all votes and ballots, (d) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (e) certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of their duties. Unless otherwise provided by the Board of Directors, the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting

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shall be determined by the person presiding at the meeting and shall be announced at the meeting. No ballot, proxies or votes, or any revocation thereof or change thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery of the State of Delaware upon application by a stockholder shall determine otherwise. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for office at an election may serve as an inspector at such election.
Section 13.    Conduct of Meetings; Organization. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. The chairman of the Board of Directors shall preside at all meetings of the stockholders. If the chairman of the board is not present at a meeting of the stockholders, the vice chairman shall preside at such meeting. If neither the chairman nor the vice chairman of the board is present at a meeting of the stockholders, the chief executive officer or the president (if the president is a director and is not also the chairman of the board) shall preside at such meeting, and, if the chief executive officer or the president is not present at such meeting, a majority of the directors present at such meeting shall elect one of their members to so preside. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the person presiding over any meeting of stockholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the presiding officer of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the person presiding over the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding officer at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding officer should so determine, such person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The secretary, or in his or her absence, one of the assistant secretaries, shall act as secretary of the meeting. In case none of the officers above designated to act as the person presiding over the meeting or as secretary of the meeting, respectively, shall be present, a person presiding over the meeting or a secretary of the meeting, as the case may be, shall be designated by the Board of Directors, and in case the Board of Directors has not so acted, in the case of the designation of a person to act as secretary of the meeting, designated by the person presiding over the meeting.
Section 14.    Order of Business. The order of business at all meetings of stockholders shall be as determined by the person presiding over the meeting.
ARTICLE III
DIRECTORS
Section 1.    General Powers. Except as provided in the Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to such powers as are herein and in the Certificate of Incorporation expressly conferred upon it, the Board of Directors shall have and may exercise all the powers of the Corporation, subject to the provisions of the laws of Delaware, the Certificate of Incorporation and these Bylaws.
Section 2.    Number, Election and Term of Office. The number of directors which constitute the entire Board of Directors of the Corporation shall be such number as is specified in, and the directors shall be elected and shall hold office only in the manner provided in, the Certificate of Incorporation.

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Section 3.    Resignation. Any director may resign at any time upon written or electronic notice to the Corporation. Such resignation shall take effect at the time therein specified, and, unless otherwise specified in such resignation, the acceptance of such resignation shall not be necessary to make it effective.
Section 4.    Vacancies. Vacancies and newly created directorships resulting from any increase in the total number of directors may be filled only in the manner provided in the Certificate of Incorporation.
Section 5.    Nominations.
(a)    Subject to the provisions contained in the Certificate of Incorporation, only persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in these Bylaws, who is entitled to vote generally in the election of directors at the meeting and who shall have complied with the notice procedures set forth in  Section 11  of ARTICLE II.
(b) Subject to the Certificate of Incorporation, no person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in  Section 11  of ARTICLE II. The person presiding over the meeting of the stockholders shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by this section, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded. A stockholder seeking to nominate a person to serve as a director must also comply with all applicable requirements of the Exchange Act, and the rules and regulations thereunder with respect to the matters set forth in this section.
Section 6.    Annual Meetings. The annual meeting of the Board of Directors shall be held without other notice than these Bylaws immediately after, and at the same place as, the annual meeting of stockholders.
Section 7.    Other Meetings and Notices. Regular meetings, other than the annual meeting, of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by resolution of the Board of Directors. Special meetings of the Board of Directors may be called by the chief executive officer of the Corporation, the most senior executive officer of the Corporation (if there is no chief executive officer), the chairman of the board, the vice chairman of the board, or a majority of the total number of directors then in office, on at least 24 hours’ notice to each director, either personally, by telephone, by mail, by telecopy or by other means of electronic transmission (notice by mail shall be deemed delivered three days after deposit in the U.S. mail).
Section 8.    Quorum, Required Vote and Adjournment. A majority of the total number of directors then in office shall constitute a quorum for the transaction of business. Unless by express provision of an applicable law, the Certificate of Incorporation or these Bylaws a different vote is required, the vote of a majority of directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting. At least 24 hours’ notice of any adjourned meeting of the Board of Directors shall be given to each director whether or not present at the time of the adjournment, if such notice shall be given by one of the means specified in  Section 7  of this ARTICLE III other than by mail, or at least three days’ notice if by mail. Any business may be transacted at an adjourned meeting that might have been transacted at the meeting as originally called.
Section 9.    Committees. The Board of Directors may, by resolution passed by a majority of the total number of directors then in office, designate one or more committees, each committee to consist of one or more of the directors of the Corporation, which to the extent provided in said resolution or resolutions shall have and may exercise the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation (including the power and authority to designate other committees of the Board of Directors);  provided ,  however , that no such committee shall have power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopting, amending, or repealing the Bylaws of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified

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member at any meeting of the committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors upon request. Each committee designated by the Board of Directors shall be formed and function in compliance with applicable law and the rules and regulations of any national securities exchange on which any securities of the Corporation are listed.
Section 10.    Committee Rules. Subject to applicable law, the rules and regulations of any national securities exchange on which any securities of the Corporation are listed and these Bylaws, each committee of the Board of Directors may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the Board of Directors designating such committee. Unless otherwise provided in such a resolution, the presence of at least a majority of the members of the committee shall be necessary to constitute a quorum. Unless otherwise provided in such a resolution, in the event that a member and that member’s alternate, if alternates are designated by the Board of Directors, of such committee is or are absent or disqualified, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member.
Section 11.    Communications Equipment. Members of the Board of Directors or any committee thereof may participate in and act at any meeting of such board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear and speak with each other, and participation in the meeting pursuant to this section shall constitute presence in person at the meeting.
Section 12.    Waiver of Notice and Presumption of Assent. Any member of the Board of Directors or any committee thereof who is present at a meeting shall be conclusively presumed to have waived notice of such meeting except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened. Such member shall be conclusively presumed to have assented to any action taken unless his or her dissent shall be entered in the minutes of the meeting or unless his or her written dissent to such action shall be filed with the person acting as the secretary of the meeting before the adjournment thereof or shall be forwarded by registered mail to the secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to any member who voted in favor of such action.
Section 13.    Action by Written Consent. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if the number of members of the Board of Directors or the relevant committee thereof, as the case may be required to take the action under consideration by the Board of Directors or any committee thereof, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.
ARTICLE IV
OFFICERS
Section 1.    Number. The officers of the Corporation shall be elected by the Board of Directors and shall consist of a chairman of the board, a vice chairman of the board, a chief executive officer, a president, one or more vice-presidents, a secretary, a chief financial officer and such other officers and assistant officers as may be deemed necessary or desirable by the Board of Directors. Any number of offices may be held by the same person, except that neither the chief executive officer nor the president shall also hold the office of secretary. In its discretion, the Board of Directors may choose not to fill any office for any period as it may deem advisable, except that the offices of president and secretary shall be filled as expeditiously as possible.
Section 2.    Election and Term of Office. The officers of the Corporation shall be elected annually by the Board of Directors at its first meeting held after each annual meeting of stockholders or as soon thereafter as convenient. Vacancies may be filled or new offices created and filled at any meeting of the Board of Directors. Each officer shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

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Section 3.    Removal. Any officer or agent elected by the Board of Directors may be removed by the Board of Directors at its discretion, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.
Section 4.    Vacancies. Any vacancy occurring in any office because of death, resignation, removal, disqualification or otherwise may be filled by the Board of Directors.
Section 5.    Compensation. Subject to applicable law and the rules and regulations of any national securities exchange on which any securities of the Corporation are listed, the compensation of all executive officers shall be approved by the Board of Directors, and no officer shall be prevented from receiving such compensation by virtue of his or her also being a Director of the Corporation.
Section 6.    Chairman of the Board and Vice Chairman of the Board. The Board of Directors shall elect, by the affirmative vote of a majority of the total number of directors then in office, a chairman of the Board of Directors and a vice chairman of the Board of Directors. The chairman of the board shall preside at all meetings of the stockholders and of the Board of Directors and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or provided in these Bylaws. If the chairman of the Board of Directors is not present at a meeting of the stockholders or the Board of Directors, the vice chairman shall preside at such meeting. If neither the chairman nor the vice chairman is present at a meeting of the stockholders or the Board of Directors, the chief executive officer or the president (if the president is a director and is not also the chairman of the Board of Directors) shall preside at such meeting, and, if the chief executive officer or the president is not present at such meeting, a majority of the directors present at such meeting shall elect one of their members to so preside. The vice chairman shall be permitted to attend all meetings of standing committees of the Board of Directors on an ex officio basis.
Section 7.    Chief Executive Officer. The chief executive officer shall have the powers and perform the duties incident to that position. Subject to the powers of the Board of Directors, the chief executive officer shall be in the general and active charge of the entire business and affairs of the Corporation, and shall be its chief policy making officer. The chief executive officer shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or provided in these Bylaws. The chief executive officer is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. Whenever the president is unable to serve, by reason of sickness, absence or otherwise, the chief executive officer shall perform all the duties and responsibilities and exercise all the powers of the president.
Section 8.    The President. The president of the Corporation shall, subject to the powers of the Board of Directors and the chief executive officer, have general charge of the business, affairs and property of the Corporation, and control over its officers, agents and employees. The president shall see that all orders and resolutions of the Board of Directors are carried into effect. The president is authorized to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The president shall have such other powers and perform such other duties as may be prescribed by the chief executive officer, the Board of Directors or as may be provided in these Bylaws.
Section 9.    Vice Presidents. The vice president, or if there shall be more than one, the vice presidents in the order determined by the Board of Directors, shall, in the absence or disability of the president, act with all of the powers and be subject to all the restrictions of the president. The vice presidents shall also perform such other duties and have such other powers as the Board of Directors, the chief executive officer, the president or these Bylaws may, from time to time, prescribe. The vice presidents may also be designated as executive vice presidents or senior vice presidents, as the Board of Directors may from time to time prescribe.
Section 10.    The Secretary and Assistant Secretaries. The secretary shall attend all meetings of the Board of Directors, all meetings of the committees thereof and all meetings of the stockholders and record all the proceedings of the meetings in a book or books to be kept for that purpose or shall ensure that his or her designee attends each such

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meeting to act in such capacity. Under the chairman of the board’s supervision, the secretary shall give, or cause to be given, all notices required to be given by these Bylaws or by law; shall have such powers and perform such duties as the Board of Directors, the chief executive officer, the president or these Bylaws may, from time to time, prescribe; and shall have custody of the corporate seal of the Corporation. The secretary, or an assistant secretary, shall have authority to affix the corporate seal to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The assistant secretary, or if there be more than one, any of the assistant secretaries, shall in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Board of Directors, the chief executive officer, the president, or the secretary may, from time to time, prescribe.
Section 11.    The Chief Financial Officer. The chief financial officer shall have the custody of the corporate funds and securities; shall keep full and accurate all books and accounts of the Corporation as shall be necessary or desirable in accordance with applicable law or generally accepted accounting principles; shall deposit all monies and other valuable effects in the name and to the credit of the Corporation as may be ordered by the chief executive officer or the Board of Directors; shall cause the funds of the Corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; shall render to the Board of Directors, at its regular meeting or when the Board of Directors so requires, an account of the Corporation; and shall have such powers and perform such duties as the Board of Directors, the chief executive officer, the president or these Bylaws may, from time to time, prescribe. If required by the Board of Directors, the chief financial officer shall give the Corporation a bond (which shall be rendered every six years) in such sums and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of chief financial officer and for the restoration to the Corporation, in case of death, resignation, retirement or removal from office of all books, papers, vouchers, money and other property of whatever kind in the possession or under the control of the chief financial officer belonging to the Corporation.
Section 12.    Other Officers, Assistant Officers and Agents. Officers, assistant officers and agents, if any, other than those whose duties are provided for in these Bylaws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the Board of Directors.
Section 13.    Absence or Disability of Officers. In the case of the absence or disability of any officer of the Corporation and of any person hereby authorized to act in such officer’s place during such officer’s absence or disability, the Board of Directors may by resolution delegate the powers and duties of such officer to any other officer or to any director, or to any other person selected by it.
ARTICLE V
INDEMNIFICATION
Section 1.    Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved (including involvement as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ proceeding ”), by reason of the fact that he or she is or was a director or officer of the Corporation or a wholly owned subsidiary of the Corporation or, while a director, officer or employee of the Corporation or a wholly owned subsidiary of the Corporation, is or was serving at the request of the Corporation or a wholly owned subsidiary of the Corporation as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another corporation or of a partnership, joint venture, limited liability company, trust or other entity or enterprise, including service with respect to an employee benefit plan (an “ indemnitee ”), shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees, judgments, fines, excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee, partner, member, manager, trustee, fiduciary or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in  Section 2  of this ARTICLE V with respect to proceedings to enforce rights to indemnification or advance of expenses,

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the Corporation shall not indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee except to the extent such proceeding (or part thereof) was authorized in writing by the Board of Directors of the Corporation. The right to indemnification conferred in this  Section 1  of this ARTICLE V shall be a contract right and shall include the obligation of the Corporation to pay the expenses incurred in defending any such proceeding in advance of its final disposition (an “ advance of expenses ”); provided, however, that an advance of expenses incurred by an indemnitee in his or her capacity as a director or officer shall be made only upon delivery to the Corporation of an undertaking (an “ undertaking ”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “ final adjudication ”) that such indemnitee is not entitled to be indemnified for such expenses under this  Section 1  of this ARTICLE V or otherwise. For purposes of this ARTICLE V, a wholly owned subsidiary of the Corporation shall be deemed to include any subsidiary for which nominal equity interests have been issued to persons other than the Corporation or any of its subsidiaries pursuant to the laws of such subsidiary’s jurisdiction of incorporation or organization.
Section 2.    Procedure for Indemnification. Any indemnification of an indemnitee or advance of expenses under Section 1  of this ARTICLE V shall be made promptly, and in any event within thirty days (or, in the case of an advance of expenses, twenty days), upon the written request of the indemnitee. If the Corporation denies a written request for indemnification or advance of expenses, in whole or in part, or if payment in full pursuant to such request is not made within thirty days (or, in the case of an advance of expenses, twenty days), the right to indemnification or advances as granted by this ARTICLE V shall be enforceable by the indemnitee in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification or advance of expenses, in whole or in part, in any such action shall also be indemnified by the Corporation.
Section 3.    Insurance. The Corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee or agent of the Corporation or a wholly owned subsidiary of the Corporation or was serving at the request of the Corporation or a wholly owned subsidiary of the Corporation as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another corporation, partnership, joint venture, limited liability company, trust or other entity or enterprise against any expense, liability or loss asserted against him or her and incurred by him or her in any such capacity, whether or not the Corporation would have the power to indemnify such person against such expenses, liability or loss under the DGCL.
Section 4.    Amendment or Repeal. Any repeal or modification of the foregoing provisions of this ARTICLE V shall not adversely affect any right or protection hereunder of any indemnitee in respect of any act, omission or condition existing or event or circumstance occurring prior to the time of such repeal or modification.
Section 5.    Non-Exclusivity of Rights. The rights to indemnification and to the advance of expenses conferred in this ARTICLE V and in the Certificate of Incorporation shall not be exclusive of any other right which any person may have or hereafter acquire hereunder or under any statute, by-law, agreement, vote of stockholders or disinterested directors or otherwise.
Section 6.    Other Sources. The Corporation’s obligation, if any, to indemnify or to advance expenses to any director, officer or employee who was or is serving at its request as a director, officer, employee or agent of another entity shall be reduced by any amount such director, officer or employee may collect as indemnification or advancement of expenses from such other entity.
Section 7.    Other Indemnification and Prepayment of Expenses. This ARTICLE V shall not limit the right of the Corporation, to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to persons other than directors or officers (including employees and agents) with the same or lesser scope and effect as provided herein when and as authorized by appropriate corporate action.
Section 8.    Merger or Consolidation. For purposes of this ARTICLE V, references to the “Corporation” shall include, in addition to the corporation resulting from or surviving a consolidation or merger with the Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger with the Corporation which, if its separate existence had continued, would have had power and authority to indemnify its

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directors, officers or employees, so that any person who is or was a director or officer of such constituent corporation or a wholly owned subsidiary of such constituent corporation or, while a director, officer or employee of such constituent corporation or a wholly owned subsidiary of such constituent corporation is or was serving at the request of such constituent corporation or a wholly owned subsidiary of such constituent corporation as a director, officer, employee, partner, member, manager, trustee, fiduciary or agent of another corporation or of a partnership, joint venture, limited liability company, trust or other entity or enterprise, including service with respect to an employee benefit plan, shall stand in the same position under this ARTICLE V with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.
Section 9.    Severability. If any provision of this ARTICLE V shall be found to be invalid or limited in application by reason of any law or regulation, it shall not affect the validity of the remaining provisions hereof.

ARTICLE VI
CERTIFICATES OF STOCK
Section 1.    General. Every holder of stock in the Corporation shall be entitled to have a certificate, signed by, or in the name of the Corporation by the president or vice president and the secretary or an assistant secretary of the Corporation, certifying the number of shares owned by such holder in the Corporation, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares (except that the foregoing shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation). If a certificate is countersigned by a transfer agent or a registrar, the required signatures may be facsimiles. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on, any such certificate or certificates shall cease to be such officer or officers of the Corporation whether because of death, resignation or otherwise before such certificate or certificates have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the Corporation. All certificates for shares shall be consecutively numbered or otherwise identified. The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the Corporation. Shares of stock of the Corporation shall only be transferred on the books of the Corporation by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. In that event, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate or certificates and record the transaction on its books. Each such new certificate will be registered in such name as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate. Upon the receipt of proper transfer instructions from the registered owner of uncertificated shares, if any, such uncertificated shares shall be cancelled, issuance of new equivalent uncertificated or certificated shares shall be made to the stockholder entitled thereto and the transaction shall recorded upon the books and records of the Corporation. The Board of Directors may appoint one or more transfer agents or registrars or both in connection with the transfer of any class or series of securities of the Corporation.
Section 2.    Lost Certificates. The Corporation may issue (i) a new certificate or certificates of stock or (ii) uncertificated shares in place of any certificate or certificates previously issued by the Corporation, as applicable, in place of any certificate or certificates previously issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her legal representative, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against the Corporation on account of the loss, theft or destruction of any such certificate or the issuance of such new certificate.

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Section 3.    Fixing a Record Date for Stockholder Meetings. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is first given. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
Section 4.    Fixing a Record Date for Other Purposes. In order that the Corporation may determine: (i) the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights; or (ii) the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purposes of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days nor less than 10 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
Section 5.    Registered Stockholders. Prior to the surrender to the Corporation of the certificate or certificates for a share or shares of stock with a request to record the transfer of such share or shares, the Corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications and otherwise to exercise all the rights and powers of an owner. The Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof.
Section 6.    Subscriptions for Stock. Unless otherwise provided for in any subscription agreement, subscriptions for shares shall be paid in full at such time, or in such installments and at such times, as shall be determined by the Board of Directors. Any call made by the Board of Directors for payment on subscriptions shall be uniform as to all shares of the same class or as to all shares of the same series. In case of default in the payment of any installment or call when such payment is due, the Corporation may proceed to collect the amount due in the same manner as any debt due the Corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1.    Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, may be declared by the Board of Directors at any regular or special meeting, in accordance with applicable law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or any other purpose and the directors may modify or abolish any such reserve in the manner in which it was created.
Section 2.    Checks, Drafts or Orders. All checks, drafts or other orders for the payment of money by or to the Corporation and all notes and other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation, and in such manner, as shall be determined by resolution of the Board of Directors or a duly authorized committee thereof.
Section 3.    Contracts. In addition to the powers otherwise granted to officers pursuant to ARTICLE IV hereof, the Board of Directors may authorize any officer or officers, or any agent or agents, of the Corporation to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.

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Section 4.    Loans. Subject to compliance with applicable law (including, if applicable, Section 13(k) of the Exchange Act), the Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiaries, including any officer or employee who is a director of the Corporation or its subsidiaries, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation and would not violate applicable law. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the Corporation, subject to applicable law. Nothing in this Section 4 shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any statute.
Section 5.    Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
Section 6.    Corporate Seal. The Board of Directors may provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Notwithstanding the foregoing, no seal shall be required by virtue of this Section.
Section 7.    Voting Securities Owned By Corporation. Voting securities in any other company held by the Corporation shall be voted by the chief executive officer, the president or a vice president, unless the Board of Directors specifically confers authority to vote with respect thereto, which authority may be general or confined to specific instances, upon some other person or officer. Any person authorized to vote securities shall have the power to appoint proxies, with general power of substitution.
Section 8.    Inspection of Books and Records. The Board of Directors shall have power from time to time to determine to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the stockholders; and no stockholder shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation.
Section 9.    Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors.
Section 10.    Section Headings. Section headings in these Bylaws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.
Section 11.    Inconsistent Provisions. In the event that any provision of these Bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the DGCL, the Exchange Act or any regulation thereunder, or any other applicable law or regulation, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.
Section 12.    Notices. Except as provided in Section 4 of ARTICLE II hereof and Section 7 of ARTICLE III hereof, all notices referred to herein shall be in writing, shall be delivered personally or by first class mail, postage prepaid, and shall be deemed to have been given when so delivered or mailed to the Corporation at its principal executive offices and to any stockholder at such holder’s address as it appears in the stock records of the Corporation (unless otherwise specified in a written notice to the Corporation by such holder).
Section 13.    Certificate of Incorporation. Unless the context requires otherwise, references in these Bylaws to the Certificate of Incorporation (as it may be amended and restated from time to time) shall also be deemed to include any duly authorized certificate of designation relating to any series of Preferred Stock of the Corporation that may be outstanding from time to time.

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ARTICLE VIII
AMENDMENTS
These Bylaws may be made, amended, altered, changed, added to or repealed as set forth in ARTICLE EIGHT of the Certificate of Incorporation.
* * * * *

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EXHIBIT 21.1
SUBSIDIARIES OF NRG YIELD, INC.

Entity Name	 	Jurisdiction	
 Adams Community Solar Garden I LLC	 	Colorado	
 Adams Community Solar Garden II LLC	 	Colorado	
 Adams Community Solar Garden III LLC	 	Colorado	
 Adams Community Solar Gardens LLC	 	Colorado	
 Alta Interconnection Management II, LLC	 	Delaware	
 Alta Interconnection Management III, LLC	 	Delaware	
 Alta Interconnection Management, LLC	 	Delaware	
 Alta Realty Holdings, LLC	 	Delaware	
 Alta Realty Investments, LLC	 	Delaware	
 Alta Wind 1-5 Holding Company, LLC	 	Delaware	
 Alta Wind Asset Management Holdings, LLC	 	Delaware	
 Alta Wind Asset Management, LLC	 	Delaware	
 Alta Wind Company, LLC	 	Delaware	
 Alta Wind Holdings, LLC	 	Delaware	
 Alta Wind I Holding Company, LLC	 	Delaware	
 Alta Wind I, LLC	 	Delaware	
 Alta Wind II Holding Company, LLC	 	Delaware	
 Alta Wind II, LLC	 	Delaware	
 Alta Wind III Holding Company, LLC	 	Delaware	
 Alta Wind III, LLC	 	Delaware	
 Alta Wind IV Holding Company, LLC	 	Delaware	
 Alta Wind IV, LLC	 	Delaware	
 Alta Wind V Holding Company, LLC	 	Delaware	
 Alta Wind V, LLC	 	Delaware	
 Alta Wind X Holding Company, LLC	 	Delaware	
 Alta Wind X, LLC	 	Delaware	
 Alta Wind X-XI TE Holdco LLC	 	Delaware	
 Alta Wind XI Holding Company, LLC	 	Delaware	
 Alta Wind XI, LLC	 	Delaware	
 Apple I REC Holdco 2011 LLC	 	Delaware	
 Arapahoe Community Solar Garden I LLC	 	Colorado	
 Avenal Park LLC	 	Delaware	
 Avenal Solar Holdings LLC	 	Delaware	
 Buffalo Bear, LLC	 	Oklahoma	
 BWC Swan Pond River, LLC	 	Delaware	
 Clear View Acres Wind Farm, LLC	 	Iowa	
 Colorado Shared Solar I LLC	 	Colorado	
 Colorado Springs Solar Garden LLC	 	Colorado	
 Continental Energy, LLC	 	Arizona	
 Cy-Hawk Wind Energy, LLC	 	Iowa	
 Denver Community Solar Garden I LLC	 	Colorado	
 Denver Community Solar Garden II LLC	 	Colorado	
 Desert Sunlight Investment Holdings, LLC	 	Delaware	

 	
 	 	 	
 Eagle View Acres Wind Farm, LLC	 	Iowa	
 Elbow Creek Wind Project LLC	 	Texas	
 Elkhorn Ridge Wind, LLC	 	Delaware	
 Elk Lake Wind Farm, LLC	 	Iowa	
 El Mirage Energy, LLC	 	Arizona	
 El Segundo Energy Center LLC	 	Delaware	
 Federal Road Solar 1, LLC	 	Delaware	
 Forward Wind Power LLC	 	Delaware	
 FUSD Energy, LLC	 	Arizona	
 GCE Holding LLC	 	Connecticut	
 GenConn Devon LLC	 	Connecticut	
 GenConn Energy LLC	 	Connecticut	
 GenConn Middletown LLC	 	Connecticut	
 Goat Wind, LP	 	Texas	
 Green Prairie Energy, LLC	 	Iowa	
 Greene Wind Energy, LLC	 	Iowa	
 Hardin Hilltop Wind, LLC	 	Iowa	
 Hardin Wind Energy, LLC	 	Iowa	
 Highland Township Wind Farm, LLC	 	Iowa	
 High Plains Ranch II, LLC	 	Delaware	
 HLE Solar Holdings LLC	 	Delaware	
 HSD Solar Holdings LLC	 	California	
 Laredo Ridge Wind, LLC	 	Delaware	
 Lenape II Solar LLC	 	Delaware	
 Lindberg Field Solar 1, LLC	 	Delaware	
 Longhorn Energy, LLC	 	Arizona	
 Lookout Wind Power LLC	 	Delaware	
 Mission Iowa Wind, LLC	 	California	
 Mission Minnesota Wind II, LLC	 	Delaware	
 Mission Wind Goat Mountain, LLC	 	Delaware	
 Mission Wind Laredo, LLC	 	Delaware	
 Mission Wind New Mexico, LLC	 	Delaware	
 Mission Wind Oklahoma, LLC	 	Delaware	
 Mission Wind PA One, LLC	 	Delaware	
 Mission Wind PA Three, LLC	 	Delaware	
 Mission Wind PA Two, LLC	 	Delaware	
 Mission Wind Pennsylvania, LLC	 	Delaware	
 Mission Wind Texas II, LLC	 	Delaware	
 Mission Wind Texas, LLC	 	Delaware	
 Mission Wind Utah, LLC	 	Delaware	
 Mission Wind Wildorado, LLC	 	Delaware	
 Monster Energy, LLC	 	Arizona	
 Natural Gas Repowering LLC	 	Delaware	
 NRG Alta Vista LLC	 	Delaware	
 NRG CA Fund LLC	 	Delaware	
 NRG DGPV 1 LLC	 	Delaware	

 	
 	 	 	
 NRG DGPV 2 LLC	 	Delaware	
 NRG DGPV 3 LLC	 	Delaware	
 NRG DGPV Fund 1 LLC	 	Delaware	
 NRG DGPV Fund 2 HoldCo A LLC	 	Delaware	
 NRG DGPV Fund 2 HoldCo B LLC	 	Delaware	
 NRG DGPV Fund 2 LLC	 	Delaware	
 NRG DGPV Holdco 1 LLC	 	Delaware	
 NRG Electricity Sales Princeton LLC	 	Delaware	
 NRG Elkhorn Holdings LLC	 	Delaware	
 NRG Energy Center Dover LLC	 	Delaware	
 NRG Energy Center Harrisburg LLC	 	Delaware	
 NRG Energy Center HCEC LLC	 	Delaware	
 NRG Energy Center Minneapolis LLC	 	Delaware	
 NRG Energy Center Omaha Holdings LLC	 	Delaware	
 NRG Energy Center Omaha LLC	 	Delaware	
 NRG Energy Center Paxton LLC	 	Delaware	
 NRG Energy Center Phoenix LLC	 	Delaware	
 NRG Energy Center Pittsburgh LLC	 	Delaware	
 NRG Energy Center Princeton LLC	 	Delaware	
 NRG Energy Center San Diego LLC	 	Delaware	
 NRG Energy Center San Francisco LLC	 	Delaware	
 NRG Energy Center Smyrna LLC	 	Delaware	
 NRG Energy Center Tucson LLC	 	Arizona	
 NRG Harrisburg Cooling LLC	 	Delaware	
 NRG Huntington Beach LLC	 	Delaware	
 NRG Marsh Landing Holdings LLC	 	Delaware	
 NRG Marsh Landing LLC	 	Delaware	
 NRG Renew Spark 2 LLC	 	Delaware	
 NRG RPV 1 LLC	 	Delaware	
 NRG RPV 2 LLC	 	Delaware	
 NRG RPV Fund 12 LLC	 	Delaware	
 NRG RPV Fund 13 LLC	 	Delaware	
 NRG RPV HoldCo 1 LLC	 	Delaware	
 NRG Solar Alpine LLC	 	Delaware	
 NRG Solar Apple LLC	 	Delaware	
 NRG Solar AV Holdco LLC	 	Delaware	
 NRG Solar Avra Valley LLC	 	Delaware	
 NRG Solar Blythe LLC	 	Delaware	
 NRG Solar Borrego Holdco LLC	 	Delaware	
 NRG Solar Borrego I LLC	 	Delaware	
 NRG Solar CVSR Holdings LLC	 	Delaware	
 NRG Solar Kansas South Holdings LLC	 	Delaware	
 NRG Solar Kansas South LLC	 	Delaware	
 NRG Solar Mayfair LLC	 	Delaware	
 NRG Solar Oasis LLC	 	Delaware	
 NRG Solar Roadrunner Holdings LLC	 	Delaware	

 	
 	 	 	
 NRG Solar Roadrunner LLC	 	Delaware	
 NRG South Trent Holdings LLC	 	Delaware	
 NRG Thermal LLC	 	Delaware	
 NRG Walnut Creek II, LLC	 	Delaware	
 NRG Walnut Creek, LLC	 	Delaware	
 NRG West Holdings LLC	 	Delaware	
 NRG Wind TE Holdco LLC	 	Delaware	
 NRG Yield DGPV Holding LLC	 	Delaware	
 NRG Yield LLC	 	Delaware	
 NRG Yield Operating LLC	 	Delaware	
 NRG Yield RPV Holding LLC	 	Delaware	
 NS Smith, LLC	 	Delaware	
 NYLD Fuel Cell Holdings LLC	 	Delaware	
 OC Solar 2010, LLC	 	California	
 Odin Wind Farm LLC	 	Minnesota	
 OWF Eight, LLC	 	Minnesota	
 OWF Five, LLC	 	Minnesota	
 OWF Four, LLC	 	Minnesota	
 OWF One, LLC	 	Minnesota	
 OWF Seven, LLC	 	Minnesota	
 OWF Six, LLC	 	Minnesota	
 OWF Three, LLC	 	Minnesota	
 OWF Two, LLC	 	Minnesota	
 Palo Alto County Wind Farm, LLC	 	Iowa	
 PESD Energy, LLC	 	Arizona	
 PFMG 2011 Finance Holdco, LLC	 	Delaware	
 PFMG Apple I LLC	 	Delaware	
 Pikes Peak Solar Garden I LLC	 	Colorado	
 Pinnacle Wind, LLC	 	Delaware	
 PM Solar Holdings, LLC	 	California	
 Pond Road Solar, LLC	 	Delaware	
 Poverty Ridge Wind, LLC	 	Iowa	
 Sand Drag LLC	 	Delaware	
 San Juan Mesa Investments, LLC	 	Delaware	
 San Juan Mesa Wind Project, LLC	 	Delaware	
 SCWFD Energy, LLC	 	Arizona	
 Silver Lake Acres Wind Farm, LLC	 	Iowa	
 Sleeping Bear, LLC	 	Delaware	
 South Trent Wind LLC	 	Delaware	
 Spanish Fork Wind Park 2, LLC	 	Utah	
 Spring Canyon Energy II LLC	 	Delaware	
 Spring Canyon Energy III LLC	 	Delaware	
 Spring Canyon Expansion Class B Holdings LLC	 	Delaware	
 Spring Canyon Expansion Holdings LLC	 	Delaware	
 Spring Canyon Expansion LLC	 	Delaware	
 Spring Canyon Interconnection LLC	 	Delaware	

 	
 	 	 	
 Statoil Energy Power/Pennsylvania Inc.	 	Pennsylvania	
 Steel Bridge Solar, LLC	 	Delaware	
 Sun City Project LLC	 	Delaware	
 Sunrise View Wind Farm, LLC	 	Iowa	
 Sunset View Wind Farm, LLC	 	Iowa	
 Sutton Wind Energy, LLC	 	Iowa	
 TA- High Desert, LLC	 	California	
 Taloga Wind LLC	 	Oklahoma	
 Tapestry Wind, LLC	 	Delaware	
 Topeka Solar 1, LLC	 	Delaware	
 UB Fuel Cell, LLC	 	Connecticut	
 Vail Energy, LLC	 	Arizona	
 Viento Funding II, LLC	 	Delaware	
 Viento Funding, LLC	 	Delaware	
 Virgin Lake Wind Farm, LLC	 	Iowa	
 Walnut Creek Energy, LLC	 	Delaware	
 WCEP Holdings, LLC	 	Delaware	
 Wildcat Energy, LLC	 	Arizona	
 Wildorado Interconnect, LLC	 	Texas	
 Wind Family Turbine, LLC	 	Iowa	
 WSD Solar Holdings, LLC	 	Delaware	
Zontos Wind, LLC	 	Iowa	

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. 333-205140 on Form S-3 and No. 333-204589 on Form S-3 of NRG Yield, Inc. of our reports dated February 29, 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 income, stockholders’ equity, cash flows, and comprehensive income for each of the years in the three-year period ended December 31, 2015, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of December 31, 2015, which reports appear in the December 31, 2015 annual report on Form 10‑K of NRG Yield, Inc.

(signed) KPMG LLP
Philadelphia, Pennsylvania
February 29, 2016

EXHIBIT 31.1
CERTIFICATION
I, Mauricio Gutierrez, certify that:
 	 	
1.	I have reviewed this annual report on Form 10-K of NRG Yield, Inc.;	
 	 	
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 	 	
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 	 	
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 	 	
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	 	
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	 	
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	 	
(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	
 	 	
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):	
 	 	
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and	
 	 	
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

 	 	
/s/ MAURICIO GUTIERREZ	 	
Mauricio Gutierrez
Chief Executive Officer
(Principal Executive Officer)	 	
Date: February 29, 2016 

EXHIBIT 31.2
CERTIFICATION
I, Kirkland B. Andrews, certify that:
 	 	
1.	I have reviewed this annual report on Form 10-K of NRG Yield, Inc.;	
 	 	
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 	 	
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 	 	
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 	 	
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	 	
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	 	
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	 	
(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	
 	 	
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):	
 	 	
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and	
 	 	
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

 	 	
/s/ KIRKLAND B. ANDREWS	 	
Kirkland B. Andrews
Chief Financial Officer
(Principal Financial Officer)	 	
Date: February 29, 2016 

EXHIBIT 31.3
CERTIFICATION
I, David Callen, certify that:
 	 	
1.	I have reviewed this annual report on Form 10-K of NRG Yield, Inc.;	
 	 	
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 	 	
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 	 	
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 	 	
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	 	
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	 	
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	 	
(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	
 	 	
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):	
 	 	
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and	
 	 	
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

 	 	
/s/ DAVID CALLEN	 	
David Callen
Chief Accounting Officer
(Principal Accounting Officer)	 	
Date: February 29, 2016 

EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of NRG Yield, Inc. on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-K”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:
 	 	
(1)	The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
 	 	
(2)	
The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Form 10-K.	

Date: February 29, 2016 

 	 	 	 	 	
 	/s/ MAURICIO GUTIERREZ  	 	
 	Mauricio Gutierrez	 	
 	Chief Executive Officer
(Principal Executive Officer) 	 	

 	/s/ KIRKLAND B. ANDREWS	 	
 	Kirkland B. Andrews	 	
 	Chief Financial Officer
(Principal Financial Officer) 	 	

 	/s/ DAVID CALLEN	 	
 	David Callen	 	
 	Chief Accounting Officer
(Principal Accounting Officer) 	 	
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of this Form 10-K or as a separate disclosure document.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to NRG Yield, Inc. and will be retained by NRG Yield, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.