SEC Filing | Clearway Energy, Inc.

View:

cwen-20230331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-36002

Clearway Energy, Inc.

(Exact name of registrant as specified in its charter)


Delaware			46-1777204
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

300 Carnegie Center, Suite 300	Princeton	New Jersey	08540
(Address of principal executive offices)			(Zip Code)

(609) 608-1525

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.01	CWEN.A	New York Stock Exchange
Class C Common Stock, par value $0.01	CWEN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of April 28, 2023, there were 34,613,853 shares of Class A common stock outstanding, par value $0.01 per share, 42,738,750 shares of Class B common stock outstanding, par value $0.01 per share, 82,385,884 shares of Class C common stock outstanding, par value $0.01 per share, and 42,336,750 shares of Class D common stock outstanding, par value $0.01 per share.

TABLE OF CONTENTS

Index


CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION			3
GLOSSARY OF TERMS			4
PART I — FINANCIAL INFORMATION			6
ITEM 1 — FINANCIAL STATEMENTS AND NOTES			6
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			29
ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			42
ITEM 4 — CONTROLS AND PROCEDURES			43
PART II — OTHER INFORMATION			44
ITEM 1 — LEGAL PROCEEDINGS			44
ITEM 1A — RISK FACTORS			44
ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			44
ITEM 3 — DEFAULTS UPON SENIOR SECURITIES			44
ITEM 4 — MINE SAFETY DISCLOSURES			44
ITEM 5 — OTHER INFORMATION			44
ITEM 6 — EXHIBITS			45
SIGNATURES			46

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q of Clearway Energy, 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 in Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as well as the following:

•The Company’s ability to maintain and grow its quarterly dividend;

•Potential risks related to the Company's relationships with GIP, TotalEnergies and CEG;

•The Company’s ability to successfully identify, evaluate and consummate acquisitions from, and dispositions to, third parties;

•The Company’s ability to acquire assets from CEG;

•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;

•Changes in law, including judicial decisions;

•Hazards customary to the power production industry and power generation operations such as fuel and electricity price volatility, unusual weather conditions (including wind and solar 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;

•Operating and financial restrictions placed on the Company that are contained in the project-level debt facilities and other agreements of certain subsidiaries and project-level subsidiaries generally, in the Clearway Energy Operating LLC amended and restated revolving credit facility and in the indentures governing the Senior Notes; and

•Cyber terrorism and inadequate cybersecurity, or the occurrence of a catastrophic loss and the possibility that the Company may not have adequate insurance to cover losses resulting from such hazards or the inability of the Company’s insurers to provide coverage.

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 Quarterly Report on Form 10-Q should not be construed as exhaustive.

GLOSSARY OF TERMS

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




2028 Senior Notes			$850 million aggregate principal amount of 4.75% unsecured senior notes due 2028, issued by Clearway Energy Operating LLC
2031 Senior Notes			$925 million aggregate principal amount of 3.75% unsecured senior notes due 2031, issued by Clearway Energy Operating LLC
2032 Senior Notes			$350 million aggregate principal amount of 3.75% unsecured senior notes due 2032, issued by Clearway Energy Operating LLC
Adjusted EBITDA			A non-GAAP measure, represents earnings before interest (including loss on debt extinguishment), tax, depreciation and amortization adjusted for mark-to-market gains or losses, asset write offs and impairments; and factors which the Company does not consider indicative of future operating performance


ASC			The FASB Accounting Standards Codification, which the FASB established as the source of authoritative GAAP
ASU			Accounting Standards Updates - updates to the ASC
ATM Program			At-The-Market Equity Offering Program
Bridge Loan Agreement			Senior secured bridge credit agreement entered into by Clearway Energy Operating LLC that provided a term loan facility in an aggregate principal amount of $335 million that was repaid on May 3, 2022
CAFD			A non-GAAP measure, Cash Available for Distribution is defined as of March 31, 2023 as Adjusted EBITDA plus cash distributions/return of investment from unconsolidated affiliates, cash receipts from notes receivable, cash distributions from noncontrolling interests, adjustments to reflect sales-type lease cash payments and payments for lease expenses, less cash distributions to noncontrolling interests, maintenance capital expenditures, pro-rata Adjusted EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness, changes in prepaid and accrued capacity payments and adjusted for development expenses
Capistrano Wind Portfolio			Five wind projects representing 413 MW of capacity, which includes Broken Bow and Crofton Bluffs located in Nebraska, Cedro Hill located in Texas and Mountain Wind Power I and II located in Wyoming
CEG			Clearway Energy Group LLC (formerly Zephyr Renewables LLC)
CEG Master Services Agreement			Master Services Agreements entered into as of August 31, 2018 and amended on February 2, 2023 between the Company, Clearway Energy LLC and Clearway Energy Operating LLC, and CEG

Clearway Energy LLC			The holding company through which the projects are owned by Clearway Energy Group LLC, the holder of Class B and Class D units, and Clearway Energy, Inc., the holder of the Class A and Class C units
Clearway Energy Group LLC			The holder of all the Company’s Class B and Class D common stock and Clearway Energy LLC’s Class B and Class D units and, from time to time, possibly shares of the Company’s Class A and/or Class C common stock
Clearway Energy Operating LLC			The holder of the project assets that are owned by Clearway Energy LLC

Company			Clearway Energy, Inc., together with its consolidated subsidiaries
CVSR			California Valley Solar Ranch
CVSR Holdco			CVSR Holdco LLC, the indirect owner of CVSR




Distributed Solar			Solar power projects, typically less than 20 MW in size (on an alternating current, or AC, basis), that primarily sell power produced to customers for usage on site, or are interconnected to sell power into the local distribution grid
Drop Down Assets			Assets under common control acquired by the Company from CEG



Exchange Act			The Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board

GAAP			Accounting principles generally accepted in the U.S.
GenConn			GenConn Energy LLC
GIP			Global Infrastructure Partners


HLBV			Hypothetical Liquidation at Book Value
IRA			Inflation Reduction Act of 2022
ITC			Investment Tax Credit
KKR			KKR Thor Bidco, LLC, an affiliate of Kohlberg Kravis Roberts & Co. L.P.
LIBOR			London Inter-Bank Offered Rate

Mesquite Star			Mesquite Star Special LLC

Mt. Storm			NedPower Mount Storm LLC
MW			Megawatt
MWh			Saleable megawatt hours, net of internal/parasitic load megawatt-hours
MWt			Megawatts Thermal Equivalent
Net Exposure			Counterparty credit exposure to Clearway Energy, Inc. net of collateral
NOLs			Net Operating Losses
NPNS			Normal Purchases and Normal Sales


OCI/OCL			Other comprehensive income/loss
O&M			Operations and Maintenance
PG&E			Pacific Gas and Electric Company
PPA			Power Purchase Agreement
PTC			Production Tax Credit

RENOM			Clearway Renewable Operation & Maintenance LLC


SCE			Southern California Edison
SEC			U.S. Securities and Exchange Commission
Senior Notes			Collectively, the 2028 Senior Notes, the 2031 Senior Notes and the 2032 Senior Notes
SOFR			Secured Overnight Financing Rate
SPP			Solar Power Partners
SREC			Solar Renewable Energy Credit

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

TotalEnergies			TotalEnergies SE
U.S.			United States of America
Utah Solar Portfolio			Seven utility-scale solar farms located in Utah, representing 530 MW of capacity
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
VIE			Variable Interest Entity

PART I - FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

CLEARWAY ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended March 31,
(In millions, except per share amounts)		2023		2022
Operating Revenues
Total operating revenues		$	288	$	214
Operating Costs and Expenses
Cost of operations, exclusive of depreciation, amortization and accretion shown separately below		108		128
Depreciation, amortization and accretion		128		124

General and administrative		10		12
Transaction and integration costs		—		2
Development costs		—		1
Total operating costs and expenses		246		267

Operating Income (Loss)		42		(53)
Other Income (Expense)
Equity in (losses) earnings of unconsolidated affiliates		(3)		4


Other income, net		8		—
Loss on debt extinguishment		—		(2)
Interest expense		(99)		(47)
Total other expense, net		(94)		(45)
Loss Before Income Taxes		(52)		(98)
Income tax benefit		(12)		(1)
Net Loss		(40)		(97)
Less: Net loss attributable to noncontrolling interests and redeemable noncontrolling interests		(40)		(65)
Net Loss Attributable to Clearway Energy, Inc.		$	—	$	(32)
Loss Per Share Attributable to Clearway Energy, Inc. Class A and Class C Common Stockholders
Weighted average number of Class A common shares outstanding - basic and diluted		35		35

Weighted average number of Class C common shares outstanding - basic and diluted		82		82

Loss per Weighted Average Class A and Class C Common Share - Basic and Diluted		$	—	$	(0.28)



Dividends Per Class A Common Share		$	0.3745	$	0.3468
Dividends Per Class C Common Share		$	0.3745	$	0.3468

See accompanying notes to consolidated financial statements.

CLEARWAY ENERGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)


	Three months ended March 31,
(In millions)		2023		2022
Net Loss		$	(40)	$	(97)
Other Comprehensive (Loss) Income
Unrealized (loss) gain on derivatives and changes in accumulated OCI/OCL, net of income tax (benefit) expense, of $(1) and $2		(3)		14
Other comprehensive (loss) income		(3)		14
Comprehensive Loss		(43)		(83)
Less: Comprehensive loss attributable to noncontrolling interests and redeemable noncontrolling interests		(42)		(57)
Comprehensive Loss Attributable to Clearway Energy, Inc.		$	(1)	$	(26)

See accompanying notes to consolidated financial statements.

CLEARWAY ENERGY, INC.

CONSOLIDATED BALANCE SHEETS


(In millions, except shares)	March 31, 2023		December 31, 2022
ASSETS	(Unaudited)
Current Assets
Cash and cash equivalents	$	576	$	657
Restricted cash	437		339
Accounts receivable — trade	150		153

Inventory	49		47
Derivative instruments	27		26


Prepayments and other current assets	50		54
Total current assets	1,289		1,276
Property, plant and equipment, net	7,863		7,421
Other Assets
Equity investments in affiliates	346		364

Intangible assets for power purchase agreements, net	2,443		2,488
Other intangible assets, net	75		77

Derivative instruments	64		63
Right-of-use assets, net	554		527

Other non-current assets	115		96
Total other assets	3,597		3,615
Total Assets	$	12,749	$	12,312
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt	$	366	$	322

Accounts payable — trade	70		55

Accounts payable — affiliates	50		22
Derivative instruments	39		50
Accrued interest expense	36		54

Accrued expenses and other current liabilities	77		114
Total current liabilities	638		617
Other Liabilities
Long-term debt	6,769		6,491
Deferred income taxes	98		119
Derivative instruments	296		303
Long-term lease liabilities	577		548
Other non-current liabilities	209		201
Total other liabilities	7,949		7,662
Total Liabilities	8,587		8,279
Redeemable noncontrolling interest in subsidiaries	9		7
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); 201,972,813 shares issued and outstanding (Class A 34,613,853, Class B 42,738,750, Class C 82,283,460, Class D 42,336,750) at March 31, 2023 and 201,972,813 shares issued and outstanding (Class A 34,613,853, Class B 42,738,750, Class C 82,283,460, Class D 42,336,750) at December 31, 2022	1		1
Additional paid-in capital	1,719		1,761
Retained earnings	419		463
Accumulated other comprehensive income	8		9
Noncontrolling interest	2,006		1,792
Total Stockholders’ Equity	4,153		4,026
Total Liabilities and Stockholders’ Equity	$	12,749	$	12,312

See accompanying notes to consolidated financial statements.

CLEARWAY ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three months ended March 31,
(In millions)	2023		2022
Cash Flows from Operating Activities
Net Loss	$	(40)	$	(97)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in earnings of unconsolidated affiliates	3		(4)
Distributions from unconsolidated affiliates	6		11
Depreciation, amortization and accretion	128		124
Amortization of financing costs and debt discounts	3		4
Amortization of intangibles	47		42
Loss on debt extinguishment	—		2

Reduction in carrying amount of right-of-use assets	4		4


Changes in deferred income taxes	(11)		(1)
Changes in derivative instruments and amortization of accumulated OCI/OCL	3		82

Cash used in changes in other working capital:
Changes in prepaid and accrued liabilities for tolling agreements	(39)		(44)
Changes in other working capital	(29)		(30)
Net Cash Provided by Operating Activities	75		93
Cash Flows from Investing Activities


Acquisition of Drop Down Assets, net of cash acquired	(7)		(51)



Capital expenditures	(88)		(47)

Return of investment from unconsolidated affiliates	9		3





Other	—		3
Net Cash Used in Investing Activities	(86)		(92)
Cash Flows from Financing Activities
Contributions from noncontrolling interests, net of distributions	273		23


Payments of dividends and distributions	(76)		(70)
Distributions to CEG of escrowed amounts	—		(64)

Proceeds from the revolving credit facility	—		80
Payments for the revolving credit facility	—		(20)
Proceeds from the issuance of long-term debt	42		194
Payments of debt issuance costs	(7)		(4)
Payments for long-term debt	(204)		(317)
Other	—		(6)
Net Cash Provided by (Used in) Financing Activities	28		(184)
Reclassification of Cash to Assets Held-for-Sale	—		(5)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	17		(188)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	996		654
Cash, Cash Equivalents and Restricted Cash at End of Period	$	1,013	$	466

See accompanying notes to consolidated financial statements.

CLEARWAY ENERGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


(In millions)	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Noncontrolling Interest		Total Stockholders’ Equity
Balances at December 31, 2022	$	—	$	1	$	1,761	$	463	$	9	$	1,792	$	4,026
Net loss	—		—		—		—		—		(43)		(43)
Unrealized loss on derivatives and changes in accumulated OCI, net of tax	—		—		—		—		(1)		(2)		(3)
Contributions from CEG, net of distributions, cash	—		—		—		—		—		30		30

Contributions from noncontrolling interests, net of distributions, cash	—		—		—		—		—		215		215

Transfers of assets under common control	—		—		(52)		—		—		46		(6)



Non-cash adjustments for change in tax basis	—		—		9		—		—		—		9
Stock-based compensation	—		—		1		—		—		—		1
Common stock dividends and distributions to CEG unit holders	—		—		—		(44)		—		(32)		(76)
Balances at March 31, 2023	$	—	$	1	$	1,719	$	419	$	8	$	2,006	$	4,153


(In millions)	Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders’ Equity
Balances at December 31, 2021	$	—	$	1	$	1,872	$	(33)	$	(6)	$	1,466	$	3,300
Net loss	—		—		—		(32)		—		(67)		(99)
Unrealized gain on derivatives and changes in accumulated OCL, net of tax	—		—		—		—		6		8		14
Distributions to CEG, net of contributions, cash	—		—		—		—		—		(3)		(3)

Contributions from noncontrolling interests, net of distributions, cash	—		—		—		—		—		28		28

Transfers of assets under common control	—		—		(12)		—		—		(25)		(37)


Non-cash adjustments for change in tax basis	—		—		8		—		—		—		8
Stock based compensation	—		—		(2)		—		—		—		(2)
Common stock dividends and distributions to CEG unit holders	—		—		(40)		—		—		(30)		(70)
Balances at March 31, 2022	$	—	$	1	$	1,826	$	(65)	$	—	$	1,377	$	3,139

See accompanying notes to consolidated financial statements.

CLEARWAY ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Nature of Business

Clearway Energy, Inc., together with its consolidated subsidiaries, or the Company, is a publicly-traded energy infrastructure investor with a focus on investments in clean energy and owner of modern, sustainable and long-term contracted assets across North America. The Company is sponsored by GIP and TotalEnergies through the portfolio company, Clearway Energy Group LLC, or CEG, which is equally owned by GIP and TotalEnergies. GIP is an independent infrastructure fund manager that makes equity and debt investments in infrastructure assets and businesses. TotalEnergies is a global multi-energy company.

The Company is one of the largest renewable energy owners in the U.S. with over 5,500 net MW of installed wind and solar generation projects. The Company’s over 8,000 net MW of assets also includes approximately 2,500 net MW of environmentally-sound, highly efficient natural gas-fired generation facilities. Through this environmentally-sound, diversified and primarily contracted portfolio, the Company endeavors to provide its investors with stable and growing dividend income. The majority of the Company’s revenues are derived from long-term contractual arrangements for the output or capacity from these assets.

The Company consolidates the results of Clearway Energy LLC through its controlling interest, with CEG’s interest shown as noncontrolling interest in the consolidated financial statements. The holders of the Company’s outstanding shares of Class A and Class C common stock are entitled to dividends as declared. CEG receives its distributions from Clearway Energy LLC through its ownership of Clearway Energy LLC Class B and Class D units. From time to time, CEG may also hold shares of the Company’s Class A and/or Class C common stock.

As of March 31, 2023, the Company owned 57.88% of the economic interests of Clearway Energy LLC, with CEG owning 42.12% of the economic interests of Clearway Energy LLC.

The following table represents a summarized structure of the Company as of March 31, 2023:

https://cdn.kscope.io/d8a7aa8ad3dba3a2cc8c623a3ad6d2e3-Clearway org picture as of 12.31.22 - 01.05.2023v6.jpg

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the SEC’s regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the consolidated financial statements included in the Company’s 2022 Form 10-K. Interim results are not necessarily indicative of results for a full year.

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company’s consolidated financial position as of March 31, 2023, and results of operations, comprehensive loss and cash flows for the three months ended March 31, 2023 and 2022.

Note 2 — Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions. These estimates and assumptions impact the reported amounts 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 amounts of net earnings during the reporting periods. Actual results could be different from these estimates.

Cash, Cash Equivalents and Restricted Cash

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 $125 million and $121 million as of March 31, 2023 and December 31, 2022, respectively.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:


	March 31, 2023		December 31, 2022
	(In millions)
Cash and cash equivalents	$	576	$	657
Restricted cash	437		339
Cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	1,013	$	996

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. As of March 31, 2023, these restricted funds were comprised of $143 million designated to fund operating expenses, $168 million designated for current debt service payments and $97 million restricted for reserves including debt service, performance obligations and other reserves as well as capital expenditures. The remaining $29 million is held in distributions reserve accounts.

Accumulated Depreciation and Accumulated Amortization

The following table presents the accumulated depreciation included in property, plant and equipment, net, and accumulated amortization included in intangible assets, net as of March 31, 2023 and December 31, 2022:


	March 31, 2023		December 31, 2022
	(In millions)
Property, Plant and Equipment Accumulated Depreciation	$	3,110	$	3,024
Intangible Assets Accumulated Amortization	925		877

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 three months ended March 31, 2023:


	First Quarter 2023
Dividends per Class A share	$	0.3745
Dividends per Class C share	0.3745

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 May 3, 2023, the Company declared quarterly dividends on its Class A and Class C common stock of $0.3818 per share payable on June 15, 2023 to stockholders of record as of June 1, 2023.

Noncontrolling Interests

Clearway Energy LLC Distributions to CEG

The following table lists distributions paid to CEG during the three months ended March 31, 2023 on Clearway Energy LLC’s Class B and D units:


	First Quarter 2023
Distributions per Class B Unit	$	0.3745
Distributions per Class D Unit	0.3745

On May 3, 2023, Clearway Energy LLC declared a distribution on its Class B and Class D units of $0.3818 per unit payable on June 15, 2023 to unit holders of record as of June 1, 2023.

Redeemable Noncontrolling Interests

To the extent that a third party has the right to redeem their interests for cash or other assets, the Company has included the noncontrolling interest attributable to the third party as a component of temporary equity in the mezzanine section of the consolidated balance sheet. The following table reflects the changes in the Company’s redeemable noncontrolling interest balance for the three months ended March 31, 2023:


	(In millions)
Balance at December 31, 2022	$	7
Cash distributions to redeemable noncontrolling interests	(1)
Comprehensive income attributable to redeemable noncontrolling interests	3
Balance at March 31, 2023	$	9

Revenue Recognition

Disaggregated Revenues

The following tables represent the Company’s disaggregation of revenue from contracts with customers along with the reportable segment for each category:


	Three months ended March 31, 2023
(In millions)	Conventional Generation		Renewables		Total
Energy revenue (a)	$	1	$	198	$	199
Capacity revenue (a)	100		5		105
Contract amortization	(6)		(41)		(47)
Other revenues	—		12		12
Mark-to-market for economic hedges	—		19		19
Total operating revenues	95		193		288
Less: Mark-to-market for economic hedges	—		(19)		(19)
Less: Lease revenue	(101)		(156)		(257)
Less: Contract amortization	6		41		47
Total revenue from contracts with customers	$	—	$	59	$	59

(a) The following amounts of energy and capacity revenue relate to leases and are accounted for under ASC 842:


(In millions)	Conventional Generation		Renewables		Total
Energy revenue	$	1	$	152	$	153
Capacity revenue	100		4		104
Total	$	101	$	156	$	257


	Three months ended March 31, 2022
(In millions)	Conventional Generation		Renewables		Thermal		Total
Energy revenue (a)	$	—	$	195	$	37	$	232
Capacity revenue (a)	114		—		14		128
Contract amortization	(6)		(36)		—		(42)
Other revenues	—		14		8		22
Mark-to-market for economic hedges	—		(126)		—		(126)
Total operating revenues	108		47		59		214
Less: Mark-to-market for economic hedges	—		126		—		126
Less: Lease revenue	(114)		(162)		(1)		(277)
Less: Contract amortization	6		36		—		42
Total revenue from contracts with customers	$	—	$	47	$	58	$	105

(a) The following amounts of energy and capacity revenue relate to leases and are accounted for under ASC 842:


(In millions)	Conventional Generation		Renewables		Thermal		Total
Energy revenue	$	—	$	162	$	1	$	163
Capacity revenue	114		—		—		114
Total	$	114	$	162	$	1	$	277

Contract Balances

The following table reflects the contract assets and liabilities included on the Company’s consolidated balance sheets:


	March 31, 2023		December 31, 2022
	(In millions)
Accounts receivable, net - Contracts with customers	$	40	$	37
Accounts receivable, net - Leases	110		116
Total accounts receivable, net	$	150	$	153

Recently Adopted Accounting Standards

In March 2020, the FASB issued ASU No. 2020-4, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide for optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. These amendments apply only to contracts that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform, which affects certain of the Company’s debt and interest rate swap agreements. The guidance is effective for all entities as of March 20, 2020 through December 31, 2022. In December 2022, the FASB issued ASU No. 2022-6, Deferral of the Sunset Date of Reference Rate Reform, to extend the end of the transition period to December 31, 2024. As of March 31, 2023, the Company has amended the majority of the contracts that previously used LIBOR as a reference rate and elected to apply relief to certain modified cash flow interest rate swap and debt agreements. The adoption did not have a material impact on the Company’s financial statements. The Company intends to amend the remaining contracts that use LIBOR as a reference rate no later than June 30, 2023, the LIBOR cessation date.

Note 3 — Acquisitions and Dispositions

Acquisitions

Daggett 3 Drop Down — On February 17, 2023, the Company, through its indirect subsidiary, Daggett Solar Investment LLC, acquired the Class A membership interests in Daggett TargetCo LLC, the indirect owner of the Daggett 3 solar project, a 300 MW solar project with matching storage capacity that is currently under construction, located in San Bernardino, California, from Clearway Renew LLC, a subsidiary of CEG, for cash consideration of $21 million. Simultaneously, a cash equity investor acquired the Class B membership interests in Daggett TargetCo LLC from Clearway Renew LLC for cash consideration of $129 million. The Company and the cash equity investor then contributed their Class A and B membership interests, respectively, into Daggett Renewable Holdco LLC, a partnership between the Company and the cash equity investor, which consolidates Daggett TargetCo LLC. Daggett TargetCo LLC consolidates, as the indirect owner of the primary beneficiary, a tax equity fund, Daggett TE Holdco LLC, which owns the Daggett 3 solar project, as further described in Note 4, Investments Accounted for by the Equity Method and Variable Interest Entities. Daggett 3 has PPAs with investment-grade counterparties that have a 15-year weighted average contract duration that commence when the underlying operating assets reach commercial operations, which is expected to occur for the majority of the operating assets in the second quarter of 2023. The Daggett 3 operations are reflected in the Company’s Renewables segment and the acquisition was funded with existing sources of liquidity. The acquisition was determined to be an asset acquisition and the Company consolidates Daggett 3 on a prospective basis in its financial statements. The assets and liabilities transferred to the Company relate to interests under common control and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. The difference between the cash paid of $21 million and the historical cost of the Company’s net assets acquired of $15 million was recorded as an adjustment to CEG’s noncontrolling interest balance. In addition, the Company reflected $21 million of the Company’s purchase price, which was contributed back to the Company by CEG to pay down the acquired long-term debt, in the line item contributions from CEG, net of distributions in the consolidated statement of stockholders’ equity.

The following is a summary of assets and liabilities transferred in connection with the acquisition as of February 17, 2023:


(In millions)	Daggett 3
Restricted cash	$	14
Property, plant and equipment	534
Right-of-use-assets, net	31
Derivative assets	27

Total assets acquired	606

Long-term debt (a)	480
Long-term lease liabilities	33
Other current and non-current liabilities (b)	78
Total liabilities assumed	591
Net assets acquired	$	15

(a) Includes a $181 million construction loan, $75 million sponsor equity bridge loan and $229 million tax equity bridge loan, offset by $5 million in unamortized debt issuance costs. See Note 7, Long-term Debt, for further discussion of the long-term debt assumed in the acquisition.

(b) Includes $32 million of project costs that were subsequently funded by CEG and will be repaid with the proceeds expected to be received when the project reaches substantial completion.

Note 4 — Investments Accounted for by the Equity Method and Variable Interest Entities

Entities that are not Consolidated

The Company has an interest in an entity that is considered a VIE under ASC 810, but for which it is not considered the primary beneficiary. The Company accounts for its interest in this entity and entities in which it has a significant investment under the equity method of accounting, as further described under Item 15 — Note 5, Investments Accounted for by the Equity Method and Variable Interest Entities, to the consolidated financial statements included in the Company’s 2022 Form 10-K.

The Company’s maximum exposure to loss as of March 31, 2023 is limited to its equity investment in the unconsolidated entities, as further summarized in the table below:


Name	Economic Interest	Investment Balance
		(In millions)
Avenal	50%	$	7
Desert Sunlight	25%	226
Elkhorn Ridge	67%	20
GenConn (a)	50%	80
San Juan Mesa	75%	13

		$	346

(a) GenConn is a variable interest entity.

Entities that are Consolidated

As further described under Item 15 — Note 5, Investments Accounted for by the Equity Method and Variable Interest Entities, to the consolidated financial statements included in the Company’s 2022 Form 10-K, the Company has a controlling financial interest in certain entities which have been identified as VIEs under ASC 810, Consolidations, or ASC 810. These arrangements are primarily related to tax equity arrangements entered into with third parties in order to monetize certain tax credits associated with wind and solar facilities. The Company also has a controlling financial interest in certain partnership arrangements with third-party investors, which have also been identified as VIEs. Under the Company’s arrangements that have been identified as VIEs, the third-party investors are allocated earnings, tax attributes and distributable cash in accordance with the respective limited liability agreements. Many of these arrangements also provide a mechanism to facilitate achievement of the investor’s specified return by providing incremental cash distributions to the investor at a specified date if the specified return has not yet been achieved.

The discussion below describes material changes to VIEs during the three months ended March 31, 2023.

Daggett Renewable Holdco LLC — As described in Note 3, Acquisitions and Dispositions, on February 17, 2023, Daggett Solar Investment LLC, an indirect subsidiary of the Company, acquired the Class A membership interests in Daggett TargetCo LLC while a cash equity investor acquired the Class B membership interests. The Company and the cash equity investor then contributed their Class A and B membership interests, respectively, into Daggett Renewable Holdco LLC, a partnership between the Company and the cash equity investor, and concurrently, Daggett TargetCo LLC became a wholly-owned subsidiary of Daggett Renewable Holdco LLC. The Company consolidates Daggett Renewable Holdco LLC as a VIE as the Company is the primary beneficiary, through its role as managing member. The Company recorded the noncontrolling interest of the cash equity investor in Daggett Renewable Holdco LLC at historical carrying amount, with the offset to additional paid-in capital. Daggett TargetCo LLC consolidates, as the indirect owner of the primary beneficiary, a tax equity fund, Daggett TE Holdco LLC, which owns the Daggett 3 solar project. The tax equity investor’s interest is shown as noncontrolling interest and the HLBV method is utilized to allocate the income or losses of Daggett TE Holdco LLC.

Summarized financial information for the Company’s consolidated VIEs consisted of the following as of March 31, 2023:


(In millions)	Alta TE Holdco LLC		Buckthorn Renewables, LLC		DGPV Funds (a)		Daggett Renewable Holdco LLC (b)		Langford TE Partnership LLC		Lighthouse Renewable Holdco LLC (c)
Other current and non-current assets	$	55	$	3	$	73	$	147	$	13	$	122
Property, plant and equipment	296		192		516		559		121		823
Intangible assets	196		—		14		—		2		—
Total assets	547		195		603		706		136		945
Current and non-current liabilities	38		11		65		493		54		305
Total liabilities	38		11		65		493		54		305
Noncontrolling interest	38		26		18		231		65		513
Net assets less noncontrolling interest	$	471	$	158	$	520	$	(18)	$	17	$	127

(a) DGPV Funds is comprised of Clearway & EFS Distributed Solar LLC, DGPV Fund 4 LLC, Golden Puma Fund LLC, Renew Solar CS4 Fund LLC and Chestnut Fund LLC, which are all tax equity funds.

(b) Daggett Renewable Holdco LLC consolidates Daggett TE Holdco LLC, which is a consolidated VIE.

(c) Lighthouse Renewable Holdco LLC consolidates Mesquite Star Tax Equity Holdco LLC, Black Rock TE Holdco LLC, Mililani TE Holdco LLC and Waiawa TE Holdco LLC, which are consolidated VIEs.


(In millions)	Lighthouse Renewable Holdco 2 LLC(a)		Oahu Solar LLC		Pinnacle Repowering TE Holdco LLC		Rattlesnake TE Holdco LLC		Rosie TargetCo LLC		Wildorado TE Holdco LLC		Other (b)
Other current and non-current assets	$	44	$	39	$	7	$	15	$	35	$	25	$	16
Property, plant and equipment	357		162		101		182		236		205		151
Intangible assets	—		—		16		—		—		—		1
Total assets	401		201		124		197		271		230		168
Current and non-current liabilities	132		22		5		17		98		21		74
Total liabilities	132		22		5		17		98		21		74
Noncontrolling interest	233		26		42		87		127		109		68
Net assets less noncontrolling interest	$	36	$	153	$	77	$	93	$	46	$	100	$	26

(a) Lighthouse Renewable Holdco 2 LLC consolidates Mesquite Sky TE Holdco LLC, which is a consolidated VIE.

(b) Other is comprised of Elbow Creek TE Holdco LLC and Spring Canyon TE Holdco LLC.

Note 5 — Fair Value of Financial Instruments

Fair Value Accounting under ASC 820

ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

•Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

•Level 2—inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

•Level 3—unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement.

For cash and cash equivalents, restricted cash, accounts receivable — trade, accounts payable — trade, accounts payable — affiliates and accrued expenses and other current liabilities, the carrying amounts approximate fair value because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.

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


	As of March 31, 2023				As of December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)




Long-term debt, including current portion (a)	$	7,197	$	6,760	$	6,874	$	6,288

(a) Excludes net debt issuance costs, which are recorded as a reduction to long-term debt on the Company’s consolidated balance sheets.

The fair value of the Company’s publicly-traded long-term debt is based on quoted market prices and is classified as Level 2 within the fair value hierarchy. The fair value of debt securities, non-publicly traded long-term debt and certain notes receivable of the Company are based on expected future cash flows discounted at market interest rates, or current interest rates for similar instruments with equivalent credit quality and are classified as Level 3 within the fair value hierarchy. The following table presents the level within the fair value hierarchy for long-term debt, including current portion:


	As of March 31, 2023				As of December 31, 2022
	Level 2		Level 3		Level 2		Level 3
	(In millions)
Long-term debt, including current portion	$	1,902	$	4,858	$	1,834	$	4,454

Recurring Fair Value Measurements

The Company records its derivative assets and liabilities at fair market value on its consolidated balance sheet. 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 March 31, 2023				As of December 31, 2022
	Fair Value (a)				Fair Value (a)
(In millions)	Level 2		Level 3			Level 2		Level 3
Derivative assets:

Interest rate contracts	$	91	$	—		$	89	$	—
Other financial instruments (b)	—		18			—		17
Total assets	$	91	$	18		$	89	$	17
Derivative liabilities:
Commodity contracts	$	—	$	334		$	—	$	353
Interest rate contracts	1		—			—		—
Total liabilities	$	1	$	334		$	—	$	353

(a) There were no derivative assets classified as Level 1 or Level 3 and no liabilities classified as Level 1 as of March 31, 2023 and December 31, 2022.

(b) Includes SREC contract.

The following table reconciles the beginning and ending balances for instruments that are recognized at fair value in the consolidated financial statements using significant unobservable inputs:


	Three months ended March 31,
		2023		2022
(In millions)	Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
Beginning balance		$	(336)	$	(154)
Settlements		4		6

Additions due to loss of NPNS exception		—		(21)
Total gains (losses) for the period included in earnings		16		(111)
Ending balance		$	(316)	$	(280)
Change in unrealized gains included in earnings for derivatives and other financial instruments held as of March 31, 2023		$	16

Derivative and Financial Instruments Fair Value Measurements

The Company's contracts are non-exchange-traded and valued using prices provided by external sources. The Company uses quoted observable forward prices to value its commodity contracts. To the extent that observable forward prices are not available, the quoted prices reflect the average of the forward prices from the prior year, adjusted for inflation. As of March 31, 2023, contracts valued with prices provided by models and other valuation techniques make up 100% of derivative liabilities and other financial instruments.

The Company’s significant positions classified as Level 3 include physical commodity contracts executed in illiquid markets. The significant unobservable inputs used in developing fair value include illiquid power tenors and location pricing, which is derived by extrapolating pricing as a basis to liquid locations. The tenor pricing and basis spread are based on observable market data when available or derived from historic prices and forward market prices from similar observable markets when not available.

The following table quantifies the significant unobservable inputs used in developing the fair value of the Company’s Level 3 positions:

March 31, 2023

Fair Value

Input/Range

Assets

Liabilities

Valuation Technique

Significant Unobservable Input

Low

High

Weighted Average

(In millions)

Commodity Contracts

—

(334)

Discounted Cash Flow

Forward Market Price (per MWh)

20.81

80.18

39.87

Other Financial Instruments

—

Discounted Cash Flow

Forecast annual generation levels of certain DG solar facilities

58,539 MWh

117,078 MWh

112,897 MWh

The following table provides the impact on the fair value measurements to increases/(decreases) in significant unobservable inputs as of March 31, 2023:


Significant Unobservable Input	Position	Change In Input	Impact on Fair Value Measurement
Forward Market Price Power	Sell	Increase/(Decrease)	Lower/(Higher)
Forecast Generation Levels	Sell	Increase/(Decrease)	Higher/(Lower)

The fair value of each contract is discounted using a risk-free interest rate. In addition, a credit reserve is applied to reflect credit risk, which is, for interest rate swaps, calculated based on credit default swaps using the bilateral method. For commodities, to the extent that the Net Exposure under a specific master agreement is an asset, the Company uses the counterparty’s default swap rate. If the Net Exposure under a specific master agreement is a liability, the Company uses a proxy of its own default swap rate. For interest rate swaps and commodities, the credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the liabilities or that a market participant would be willing to pay for the assets. As of March 31, 2023, the non-performance reserve was a $35 million gain recorded primarily to total operating revenues in the consolidated statements of operations. 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 under Item 15 — Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company’s 2022 Form 10-K, 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) monitoring of counterparties' credit limits on an as needed basis; (iii) as applicable, 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. A significant portion of these commodity contracts are with utilities with strong credit quality and public utility commission or other regulatory support. However, such regulated utility counterparties can be impacted by changes in government regulations or adverse financial conditions, which the Company is unable to predict. Certain subsidiaries of the Company sell the output of their facilities to PG&E, a significant counterparty of the Company, under long-term PPAs, and PG&E’s credit rating is below investment-grade.

Note 6 — Derivative Instruments and Hedging Activities

This footnote should be read in conjunction with the complete description under Item 15 — Note 7, Accounting for Derivative Instruments and Hedging Activities, to the consolidated financial statements included in the Company’s 2022 Form 10-K.

Interest Rate Swaps

The Company enters into interest rate swap agreements in order to hedge the variability of expected future cash interest payments. As of March 31, 2023, the Company had interest rate derivative instruments on non-recourse debt extending through 2031, a portion of which were designated as cash flow hedges. Under the interest rate swap agreements, the Company pays a fixed rate and the counterparties to the agreements pay a variable interest rate.

Energy-Related Commodities

As of March 31, 2023, the Company had energy-related derivative instruments extending through 2033. At March 31, 2023, these contracts were not designated as cash flow or fair value 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:

Total Volume

March 31, 2023

December 31, 2022

Commodity

Units

(In millions)

Power

MWh

(17)

(18)

Interest

Dollars

1,678

1,084

Fair Value of Derivative Instruments

The following table summarizes the fair value within the derivative instrument valuation on the consolidated balance sheets:


	Fair Value
	Derivative Assets				Derivative Liabilities
	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
	(In millions)
Derivatives Designated as Cash Flow Hedges:
Interest rate contracts current	$	6	$	7	$	—	$	—
Interest rate contracts long-term	14		18		—		—
Total Derivatives Designated as Cash Flow Hedges	$	20	$	25	$	—	$	—
Derivatives Not Designated as Cash Flow Hedges:
Interest rate contracts current	$	21	$	19	$	—	$	—
Interest rate contracts long-term	50		45		1		—
Commodity contracts current	—		—		39		50
Commodity contracts long-term	—		—		295		303
Total Derivatives Not Designated as Cash Flow Hedges	$	71	$	64	$	335	$	353
Total Derivatives	$	91	$	89	$	335	$	353

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 level. As of March 31, 2023 and December 31, 2022, the amount of outstanding collateral paid or received was immaterial. The following tables summarize the offsetting of derivatives by counterparty:


	Gross Amounts Not Offset in the Statement of Financial Position
As of March 31, 2023	Gross Amounts of Recognized Assets/Liabilities		Derivative Instruments		Net Amount
Commodity contracts	(In millions)

Derivative liabilities	$	(334)	$	—	$	(334)
Total commodity contracts	$	(334)	$	—	$	(334)
Interest rate contracts
Derivative assets	$	91	$	(1)	$	90
Derivative liabilities	(1)		1		—
Total interest rate contracts	$	90	$	—	$	90
Total derivative instruments	$	(244)	$	—	$	(244)


	Gross Amounts Not Offset in the Statement of Financial Position
As of December 31, 2022	Gross Amounts of Recognized Assets/Liabilities		Derivative Instruments		Net Amount
Commodity contracts	(In millions)

Derivative liabilities	$	(353)	$	—	$	(353)
Total commodity contracts	$	(353)	$	—	$	(353)
Interest rate contracts
Derivative assets	$	89	$	—	$	89

Total interest rate contracts	$	89	$	—	$	89
Total derivative instruments	$	(264)	$	—	$	(264)

Accumulated Other Comprehensive Income (Loss)

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


	Three months ended March 31,
			2023		2022
		(In millions)
Accumulated OCI (OCL) beginning balance			$	24	$	(11)
Reclassified from accumulated OCI (OCL) to income due to realization of previously deferred amounts			—		2

Mark-to-market of cash flow hedge accounting contracts			(3)		12
Accumulated OCI (OCL) ending balance, net of income tax expense of $2 and $2, respectively			21		3
Accumulated OCI attributable to noncontrolling interests			13		3
Accumulated OCI attributable to Clearway Energy, Inc.			$	8	$	—
Gains expected to be realized from OCI during the next 12 months, net of income tax expense of $1			$	4

Amounts reclassified from accumulated OCI (OCL) into income are recorded to interest expense.

Impact of Derivative Instruments on the Consolidated Statements of Operations

Mark-to-market gains/(losses) related to the Company’s derivatives are recorded in the consolidated statements of operations as follows:


	Three months ended March 31,
			2023		2022
		(In millions)
Interest Rate Contracts (Interest expense)			$	(21)	$	41
Commodity Contracts (Mark-to-market for economic hedging activities) (a)			18		(125)

(a) Relates to long-term commodity contracts at Elbow Creek, Mesquite Star, Mt. Storm, Langford and Mesquite Sky. During the three months ended March 31, 2022, the commodity contract for Langford, which previously met the NPNS exception, no longer qualified for NPNS treatment and, accordingly, is accounted for as a derivative and marked to fair value through operating revenues.

See Note 5, Fair Value of Financial Instruments, for a discussion regarding concentration of credit risk.

Note 7 — Long-term Debt

This note should be read in conjunction with the complete description under Item 15 — Note 10, Long-term Debt, to the consolidated financial statements included in the Company’s 2022 Form 10-K. The Company’s borrowings, including short-term and long-term portions, consisted of the following:


(In millions, except rates)	March 31, 2023		December 31, 2022		March 31, 2023 interest rate % (a) (b)	Letters of Credit Outstanding at March 31, 2023


2028 Senior Notes	$	850	$	850	4.750
2031 Senior Notes	925		925		3.750
2032 Senior Notes	350		350		3.750
Clearway Energy LLC and Clearway Energy Operating LLC Revolving Credit Facility, due 2028 (c)	—		—		S+1.850	$	139

Non-recourse project-level debt:
Agua Caliente Solar LLC, due 2037	645		649		2.395-3.633	45
Alta Wind Asset Management LLC, due 2031	12		12		L+2.625	—
Alta Wind I-V lease financing arrangements, due 2034 and 2035	709		709		5.696-7.015	23
Alta Wind Realty Investments LLC, due 2031	21		22		7.000	—
Borrego, due 2024 and 2038	51		51		Various	—
Buckthorn Solar, due 2025	119		119		L+1.750	20
Capistrano Wind Portfolio, due 2029 and 2031	152		156		S+2.100-S+2.150	33
Carlsbad Energy Holdings LLC, due 2027	114		115		L+1.750	77
Carlsbad Energy Holdings LLC, due 2038	407		407		4.120	—
Carlsbad Holdco, LLC, due 2038	197		197		4.210	5
CVSR, due 2037	612		627		2.339-3.775	—
CVSR Holdco Notes, due 2037	151		160		4.680	13
Daggett 3, due 2023 and 2028	446		—		S+1.262	35
DG-CS Master Borrower LLC, due 2040	406		413		3.510	30








Marsh Landing, due 2023	6		19		L+2.375	31
Mililani I, due 2027	47		47		L+1.500	6
NIMH Solar, due 2024	161		163		S+2.150	12
Oahu Solar Holdings LLC, due 2026	83		83		L+1.375	10

Rosie Class B LLC, due 2027	76		76		L+1.750	17






Utah Solar Holdings, due 2036	257		257		3.590	9

Viento Funding II, LLC, due 2029	182		184		S+1.475	25
Waiawa, due 2028	47		97		S+1.600	12
Walnut Creek, due 2023	8		19		L+1.875	63
WCEP Holdings, LLC, due 2023	25		26		L+3.000	—
Other	135		137		Various	252
Subtotal non-recourse project-level debt	5,069		4,745
Total debt	7,194		6,870
Less current maturities	(366)		(322)
Less net debt issuance costs	(62)		(61)
Add premiums (d)	3		4
Total long-term debt	$	6,769	$	6,491

(a) As of March 31, 2023, L+ equals 3 month LIBOR plus x%, except Marsh Landing, due 2023 and Walnut Creek, due 2023, where L+ equals 1 month LIBOR plus x%.

(b) S+ equals SOFR plus x%.

(d) Premiums relate to the 2028 Senior Notes.

The financing arrangements listed above contain certain covenants, including financial covenants that the Company is required to be in compliance with during the term of the respective arrangement. As of March 31, 2023, the Company was in compliance with all of the required covenants.

The discussion below describes material changes to or additions of long-term debt for the three months ended March 31, 2023.

Clearway Energy LLC and Clearway Energy Operating LLC Revolving Credit Facility

On March 15, 2023, Clearway Energy Operating LLC refinanced the Amended and Restated Credit Agreement, which (i) replaced LIBOR with SOFR plus a credit spread adjustment of 0.10% as the applicable reference rate, (ii) increased the available revolving commitments to an aggregate principal amount of $700 million, (iii) extended the maturity date to March 15, 2028, (iv) increased the letter of credit sublimit to $594 million and (v) implemented certain other technical modifications.

As of March 31, 2023, the Company had no outstanding borrowings under the revolving credit facility and $139 million in letters of credit outstanding.

Project-level Debt

Waiawa

On March 30, 2023, when the Waiawa solar project reached substantial completion, the tax equity investor contributed an additional $41 million and CEG contributed an additional $8 million, which was utilized, along with the $17 million in escrow, to repay the $55 million tax equity bridge loan, to fund $10 million in construction completion reserves and to pay $1 million in associated fees. Subsequent to the Waiawa acquisition on October 3, 2022, the Company borrowed an additional $25 million in construction loans that was converted to a term loan in the amount of $47 million on March 30, 2023.

Daggett 3

On February 17, 2023, as part of the acquisition of Daggett 3, as further described in Note 3, Acquisitions and Dispositions, the Company assumed the project’s financing agreement, which included a $181 million construction loan that converts to a term loan upon the project reaching substantial completion, $229 million tax equity bridge loan and $75 million sponsor equity bridge loan. The sponsor equity bridge loan was repaid at acquisition date, along with $8 million in associated fees, utilizing all of the proceeds from the Company and cash equity investor, which were contributed back to the Company by CEG. The tax equity bridge loan will be repaid with the final proceeds received from the tax equity investor upon Daggett 3 reaching substantial completion, which is expected to occur in the second half of 2023, along with the $62 million that was contributed into escrow by the tax equity investor at acquisition date. Subsequent to the Daggett 3 acquisition, the Company borrowed an additional $36 million in construction loans.

Note 8 — Loss Per Share

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding. Shares issued during the year are weighted for the portion of the year that they were outstanding. Diluted loss per share is computed in a manner consistent with that of basic loss per share while giving effect to all potentially dilutive common shares that were outstanding during the period.

The reconciliation of the Company’s basic and diluted loss per share is shown in the following tables:


	Three months ended March 31,
	2023				2022
(In millions, except per share data) (a)	Common Class A		Common Class C		Common Class A		Common Class C
Basic and diluted loss per share attributable to Clearway Energy, Inc. common stockholders
Net loss attributable to Clearway Energy, Inc.	$	—	$	—	$	(9)	$	(23)
Weighted average number of common shares outstanding — basic and diluted	35		82		35		82
Loss per weighted average common share — basic and diluted	$	—	$	—	$	(0.28)	$	(0.28)

(a) Net loss attributable to Clearway Energy, Inc. and basic and diluted loss per share might not recalculate due to presenting amounts in millions rather than whole dollars.

Note 9 — Segment Reporting

The Company’s segment structure reflects how management currently operates and allocates resources. The Company’s businesses are segregated based on conventional power generation, renewable businesses which consist of solar, wind and energy storage The Corporate segment reflects the Company’s corporate costs and includes eliminating entries. 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).


	Three months ended March 31, 2023
(In millions)	Conventional Generation		Renewables		Corporate (a)		Total
Operating revenues	$	95	$	193	$	—	$	288
Cost of operations, exclusive of depreciation, amortization and accretion shown separately below	29		79		—		108
Depreciation, amortization and accretion	33		95		—		128

General and administrative	—		—		10		10




Operating income (loss)	33		19		(10)		42
Equity in earnings (losses) of unconsolidated affiliates	1		(4)		—		(3)

Other income, net	1		1		6		8



Interest expense	(11)		(64)		(24)		(99)
Income (loss) before income taxes	24		(48)		(28)		(52)
Income tax benefit	—		—		(12)		(12)
Net Income (Loss)	$	24	$	(48)	$	(16)	$	(40)
Total Assets	$	2,203	$	10,055	$	491	$	12,749

(a) Includes eliminations.


	Three months ended March 31, 2022
(In millions)	Conventional Generation		Renewables		Thermal		Corporate (a)		Total
Operating revenues	$	108	$	47	$	59	$	—	$	214
Cost of operations, exclusive of depreciation, amortization and accretion shown separately below	21		68		39		—		128
Depreciation, amortization and accretion	33		91		—		—		124

General and administrative	—		—		1		11		12
Transaction and integration costs	—		—		—		2		2
Development costs	—		—		1		—		1
Operating income (loss)	54		(112)		18		(13)		(53)
Equity in earnings of unconsolidated affiliates	1		3		—		—		4

Loss on debt extinguishment	—		(2)		—		—		(2)



Interest expense	(8)		(8)		(5)		(26)		(47)
Income (loss) before income taxes	47		(119)		13		(39)		(98)
Income tax benefit	—		—		—		(1)		(1)
Net Income (Loss)	$	47	$	(119)	$	13	$	(38)	$	(97)

(a) Includes eliminations.

Note 10 — Income Taxes

Effective Tax Rate

The income tax provision consisted of the following amounts:


	Three months ended March 31,
			2023			2022
		(In millions, except percentages)
Loss before income taxes			$	(52)		$	(98)
Income tax benefit			(12)			(1)
Effective income tax rate			23.1		%	1.0		%

For both the three months ended March 31, 2023 and 2022, respectively, the overall effective tax rate was different than the statutory rate of 21% primarily due to the allocation of taxable earnings and losses based on the partners’ interest in Clearway Energy LLC, which includes the effects of applying the HLBV method of accounting for book purposes for certain partnerships.

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

Note 11 — Related Party Transactions

In addition to the transactions and relationships described elsewhere in the notes to the consolidated financial statements, certain subsidiaries of CEG provide services to the Company and its project entities. Amounts due to CEG subsidiaries are recorded as accounts payable — affiliates and amounts due to the Company from CEG subsidiaries are recorded as accounts receivable — affiliates in the Company’s consolidated balance sheets. The disclosures below summarize the Company’s material related party transactions with CEG and its subsidiaries that are included in the Company’s operating costs.

O&M Services Agreements by and between the Company and Clearway Renewable Operation & Maintenance LLC

Various wholly-owned subsidiaries of the Company in the Renewables segment are party to services agreements with Clearway Renewable Operation & Maintenance LLC, or RENOM, a wholly-owned subsidiary of CEG, which provides operation and maintenance, or O&M, services to these subsidiaries. The Company incurred total expenses for these services of $17 million and $15 million for the three months ended March 31, 2023 and 2022, respectively. There was a balance of $11 million and $14 million due to RENOM as of March 31, 2023 and December 31, 2022, respectively.

Administrative Services Agreements by and between the Company and CEG

Various wholly-owned subsidiaries of the Company are parties to services agreements with Clearway Asset Services LLC and Solar Asset Management LLC, two wholly-owned subsidiaries of CEG, which provide various administrative services to the Company's subsidiaries. The Company incurred expenses under these agreements of $4 million and $3 million for the three months ended March 31, 2023 and 2022, respectively. There was a balance of $1 million and $3 million due to CEG as of March 31, 2023 and December 31, 2022, respectively.

CEG Master Services Agreements

The Company is a party to Master Services Agreements with CEG, or MSAs, pursuant to which CEG and certain of its affiliates or third-party service providers provide certain services to the Company, including operational and administrative services, which include human resources, information systems, external affairs, accounting, procurement and risk management services, and the Company provides certain services to CEG, including accounting, internal audit, tax and treasury services, in exchange for the payment of fees in respect of such services. The Company incurred net expenses of $1 million under these agreements for each of the three months ended March 31, 2023 and 2022.

Note 12 — Contingencies

This note should be read in conjunction with the complete description under Item 15 — Note 16, Commitments and Contingencies, to the consolidated financial statements included in the Company’s 2022 Form 10-K.

The Company’s material legal proceeding is described below. The Company believes that it has a valid defense to this legal proceeding and intends to defend it vigorously. The Company records reserves for estimated losses from contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. As applicable, the Company has established an adequate reserve for the matter discussed below. In addition, legal costs are expensed as incurred. Management assesses such matters based on current information and makes a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought, and the probability of success. The Company is unable to predict the outcome of the legal proceeding below or reasonably estimate the scope or amount of any associated costs and potential liabilities. As additional information becomes available, management adjusts its assessment and estimate of such contingency accordingly. Because litigation is subject to inherent uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of the Company’s liabilities and contingencies could be at amounts that are different from its currently recorded reserves and that such difference could be material.

In addition to the legal proceeding noted below, the Company and its subsidiaries are party to other litigation or legal proceedings arising in the ordinary course of business. In management’s opinion, the disposition of these ordinary course matters will not materially adversely affect the Company’s consolidated financial position, results of operations, or cash flows.

Buckthorn Solar Litigation

On October 8, 2019, the City of Georgetown, Texas, or Georgetown, filed a petition in the District Court of Williamson County, Texas naming Buckthorn Westex, LLC, the Company’s subsidiary that owns the Buckthorn Westex solar project, as the defendant, alleging fraud by nondisclosure and breach of contract in connection with the project and the PPA, and seeking (i) rescission and/or cancellation of the PPA, (ii) declaratory judgment that the alleged breaches constitute an event of default under the PPA entitling Georgetown to terminate, and (iii) recovery of all damages, costs of court, and attorneys’ fees. On November 15, 2019, Buckthorn Westex filed an original answer and counterclaims (i) denying Georgetown’s claims, (ii) alleging Georgetown has breached its contracts with Buckthorn Westex by failing to pay amounts due, and (iii) seeking relief in the form of (x) declaratory judgment that Georgetown’s alleged failure to pay amounts due constitute breaches of and an event of default under the PPA and that Buckthorn did not commit any events of default under the PPA, (y) recovery of costs, expenses, interest, and attorneys’ fees, and (z) such other relief to which it is entitled at law or in equity. In response to motions for partial summary judgment filed by each party, the court denied Georgetown’s motion in its entirety, granted Buckthorn Westex’s motion with respect to the fraud by nondisclosure claim and denied Buckthorn Westex’s motion with respect to the breach of contract claim. The case is expected to proceed to trial in October 2023. Buckthorn Westex believes the allegations of Georgetown are meritless, and Buckthorn Westex is vigorously defending its rights under the PPA.

ITEM 2 — Management’s Discussion and Analysis of Financial Condition and the Results of Operations

The following discussion analyzes the Company’s historical financial condition and results of operations.

As you read this discussion and analysis, refer to the Company’s consolidated financial statements to this Form 10-Q, which present the results of operations for the three months ended March 31, 2023 and 2022. Also refer to the Company’s 2022 Form 10-K, which includes detailed discussions of various items impacting the Company’s business, results of operations and financial condition.

The discussion and analysis below has been organized as follows:

•Executive Summary, including a description of the business and significant events that are important to understanding the results of operations and financial condition;

•Results of operations, including an explanation of significant differences between the periods in the specific line items of the consolidated statements of income;

•Financial condition addressing liquidity position, sources and uses of cash, capital resources and requirements, commitments and off-balance sheet arrangements;

•Known trends that may affect the Company’s results of operations and financial condition in the future; and

•Critical accounting policies which are most important to both the portrayal of the Company’s financial condition and results of operations, and which require management's most difficult, subjective or complex judgment.

Executive Summary

Introduction and Overview

As of March 31, 2023, the Company’s operating assets are comprised of the following projects:


Projects	Percentage Ownership		Net Capacity (MW) (a)	Counterparty	Expiration
Conventional
Carlsbad	100	%	527	San Diego Gas & Electric	2038
El Segundo	100	%	550	SCE	2023 - 2026
GenConn Devon	50	%	95	Connecticut Light & Power	2040
GenConn Middletown	50	%	95	Connecticut Light & Power	2041
Marsh Landing	100	%	720	Various	2023 - 2030
Walnut Creek	100	%	485	SCE	2023 - 2026
Total Conventional			2,472
Utility Scale Solar
Agua Caliente	51	%	148	PG&E	2039
Alpine	100	%	66	PG&E	2033
Avenal	50	%	23	PG&E	2031
Avra Valley	100	%	27	Tucson Electric Power	2032
Blythe	100	%	21	SCE	2029
Borrego	100	%	26	San Diego Gas and Electric	2038
Buckthorn Solar (b)	100	%	150	City of Georgetown, TX	2043
CVSR	100	%	250	PG&E	2038
Desert Sunlight 250	25	%	63	SCE	2034
Desert Sunlight 300	25	%	75	PG&E	2039
Kansas South	100	%	20	PG&E	2033
Mililani I (b) (c)	50	%	20	Hawaiian Electric Company	2042
Oahu Solar Projects (b)	100	%	61	Hawaiian Electric Company	2041
Roadrunner	100	%	20	El Paso Electric	2031
Rosamond Central (b)	50	%	96	Various	2035 - 2047
TA High Desert	100	%	20	SCE	2033
Utah Solar Portfolio	100	%	530	PacifiCorp	2036
Waiawa (b) (c)	50	%	36	Hawaiian Electric Company	2043
Total Utility Scale Solar (d)			1,652
Distributed Solar
DGPV Fund Projects (b)	100	%	286	Various	2030 - 2044
Solar Power Partners (SPP) Projects	100	%	25	Various	2026 - 2037
Other DG Projects	100	%	21	Various	2023 - 2039
Total Distributed Solar (d)			332


Projects	Percentage Ownership		Net Capacity (MW) (a)	Counterparty	Expiration
Wind
Alta I	100	%	150	SCE	2035
Alta II	100	%	150	SCE	2035
Alta III	100	%	150	SCE	2035
Alta IV	100	%	102	SCE	2035
Alta V	100	%	168	SCE	2035
Alta X (b)	100	%	137	SCE	2038
Alta XI (b)	100	%	90	SCE	2038
Black Rock (b)	50	%	58	Toyota and AEP	2036
Buffalo Bear	100	%	19	Western Farmers Electric Co-operative	2033
Capistrano Wind Portfolio	100	%	413	Various	2030 - 2033
Elbow Creek (b)	100	%	122	Various	2029
Elkhorn Ridge	66.7	%	54	Nebraska Public Power District	2029
Forward	100	%	29	Constellation NewEnergy, Inc.	2025
Goat Wind	100	%	150	Dow Pipeline Company	2025
Langford (b)	100	%	160	Goldman Sachs	2033
Laredo Ridge	100	%	81	Nebraska Public Power District	2031
Lookout	100	%	38	Southern Maryland Electric Cooperative	2030
Mesquite Sky (b)	50	%	170	Various	2033 - 2036
Mesquite Star (b)	50	%	210	Various	2032 - 2035
Mt. Storm	100	%	264	Citigroup	2031
Ocotillo	100	%	55	N/A
Odin	99.9	%	21	Missouri River Energy Services	2028
Pinnacle (b)	100	%	54	Maryland Department of General Services and University System of Maryland	2031
Rattlesnake (b) (e)	100	%	160	Avista Corporation	2040
San Juan Mesa	75	%	90	Southwestern Public Service Company	2025
Sleeping Bear	100	%	95	Public Service Company of Oklahoma	2032
South Trent	100	%	101	AEP Energy Partners	2029
Spanish Fork	100	%	19	PacifiCorp	2028
Spring Canyon II (b)	90.1	%	31	Platte River Power Authority	2039
Spring Canyon III (b)	90.1	%	26	Platte River Power Authority	2039
Taloga	100	%	130	Oklahoma Gas & Electric	2031
Wildorado (b)	100	%	161	Southwestern Public Service Company	2027
Total Wind (d)			3,658
Total net generation capacity			8,114

(a) Net capacity represents the maximum, or rated, generating capacity of the facility multiplied by the Company’s percentage ownership in the facility as of March 31, 2023.

(b) Projects are part of tax equity arrangements and ownership percentage is based on cash to be distributed, as further described in Note 4, Investments Accounted for by the Equity Method and Variable Interest Entities.

(d) Typical average capacity factors are 25% for solar facilities and 25-45% for wind facilities. For the three months ended March 31, 2023, the Company's solar and wind facilities had weighted-average capacity factors of 20% and 34%, respectively. For the three months ended March 31, 2022, the Company’s solar and wind facilities had weighted-average capacity factors of 25% and 32%, respectively. The weight-average capacity factors can vary based on seasonality and weather conditions.

(e) Rattlesnake has a deliverable capacity of 144 MW.

Significant Events

Drop Down Transactions

•On May 3, 2023, the Company entered into an agreement with CEG to repower the Cedro Hill wind project, which is included in the Capistrano Wind Portfolio and is located in Bruni, Texas. The Company expects to invest approximately $63 million in net corporate capital, subject to closing adjustments. Contingent upon achieving repowering commercial operations in the second half of 2024, the 160 MW project will sell power to its existing counterparty, an investment-grade utility, for an additional 15 years ending in 2045 under an amended PPA.

•On February 17, 2023, the Company, through its indirect subsidiary, Daggett Solar Investment LLC, acquired the Class A membership interests in Daggett TargetCo LLC, the indirect owner of the Daggett 3 solar project, a 300 MW solar project with matching storage capacity that is currently under construction, located in San Bernardino, California from Clearway Renew LLC, a subsidiary of CEG, for cash consideration of $21 million. Simultaneously, a cash equity investor acquired the Class B membership interests in Daggett TargetCo LLC from Clearway Renew LLC for cash consideration of $129 million. The Company and the third-party investor then contributed their Class A and B membership interests, respectively, into Daggett Renewable Holdco LLC, a partnership between the Company and the cash equity investor, which consolidates Daggett TargetCo LLC. Daggett TargetCo LLC consolidates, as the indirect owner of the primary beneficiary, a tax equity fund, Daggett TE Holdco LLC, which owns the Daggett 3 solar project. See Note 3, Acquisitions and Dispositions, for further discussion of the transaction.

Corporate Financing Activities

•On March 15, 2023, Clearway Energy Operating LLC refinanced the Amended and Restated Credit Agreement. See Note 7, Long-term Debt, for further discussion of the amendment.

Project-level Financing Activities

•In connection with the 2022 Drop Down of Waiawa and the 2023 Drop Down of Daggett 3, the Company assumed non-recourse project-level debt. See Note 7, Long-term Debt, for further discussion of the non-recourse project-level debt associated with each project.

Environmental Matters

The Company is subject to a wide range of environmental laws during the development, construction, ownership and operation of facilities. These existing and future laws generally require that governmental permits and approvals be obtained before construction and maintained during operation of facilities. The Company is obligated to comply with all environmental laws and regulations applicable within each jurisdiction and required to implement environmental programs and procedures to monitor and control risks associated with the construction, operation and decommissioning of regulated or permitted energy assets. Federal and state environmental laws have historically become more stringent over time, although this trend could change in the future.

The Company’s environmental matters are further described in the Company’s 2022 Form 10-K in Item 1, Business — Environmental Matters and Item 1A, Risk Factors.

Regulatory Matters

The Company’s regulatory matters are described in the Company’s 2022 Form 10-K in Item 1, Business — Regulatory Matters and Item 1A, Risk Factors.

Consolidated Results of Operations

The following table provides selected financial information:


	Three months ended March 31,
(In millions)		2023		2022		Change
Operating Revenues
Energy and capacity revenues		$	304	$	360	$	(56)
Other revenues		12		22		(10)
Contract amortization		(47)		(42)		(5)
Mark-to-market for economic hedges		19		(126)		145
Total operating revenues		288		214		74
Operating Costs and Expenses
Cost of fuels		—		22		(22)

Operations and maintenance		83		76		7
Other costs of operations		25		30		(5)
Depreciation, amortization and accretion		128		124		4

General and administrative		10		12		(2)
Transaction and integration costs		—		2		(2)
Development costs		—		1		(1)
Total operating costs and expenses		246		267		(21)

Operating Income (Loss)		42		(53)		95
Other Income (Expense)
Equity in (losses) earnings of unconsolidated affiliates		(3)		4		(7)

Other income, net		8		—		8
Loss on debt extinguishment		—		(2)		2
Derivative interest (expense) income		(21)		41		(62)
Other interest expense		(78)		(88)		10
Total other expense, net		(94)		(45)		(49)
Loss Before Income Taxes		(52)		(98)		46
Income tax benefit		(12)		(1)		(11)
Net Loss		(40)		(97)		57
Less: Net loss attributable to noncontrolling interests and redeemable noncontrolling interests		(40)		(65)		25
Net Loss Attributable to Clearway Energy, Inc.		$	—	$	(32)	$	32


	Three months ended March 31,
Business metrics:		2023		2022
Solar MWh generated/sold (in thousands) (a)		866		1,060
Wind MWh generated/sold (in thousands) (a)		2,744		2,259
Renewables MWh generated/sold (in thousands) (a)		3,610		3,319
Thermal MWt sold (in thousands) (b)		—		652
Thermal MWh sold (in thousands) (b)		—		14
Conventional MWh generated (in thousands) (a) (c)		89		132
Conventional equivalent availability factor		74.4	%	95.3	%

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

(b) On May 1, 2022, the Company completed the sale of 100% of its interests in the Thermal Business to KKR.

Management’s Discussion of the Results of Operations for the Three Months Ended March 31, 2023 and 2022

Operating Revenues

Operating revenues increased by $74 million during the three months ended March 31, 2023, compared to the same period in 2022, due to a combination of the drivers summarized in the table below:


		(In millions)
Renewables Segment	Increase driven by the acquisition of the Capistrano Wind Portfolio in August 2022.	$	20
	Decrease driven primarily by lower solar generation.	(14)
Conventional Segment	Decrease driven by lower availability at El Segundo facility due to the timing of annual planned maintenance outages.	(8)
	Decrease driven by outages at the Walnut Creek and Marsh Landing facilities during the first quarter of 2023, resulting in lower capacity revenue.	(5)
Thermal Segment	Decrease driven by the sale of the Thermal Business on May 1, 2022.	(59)
Mark-to-market for economic hedges	Increase primarily driven by decreases in forward power prices in the ERCOT and PJM markets.	145
Contract amortization	Increase primarily driven by amortization of the intangible assets of PPAs related to the acquisition of the Capistrano Wind Portfolio in August 2022.	(5)
		$	74

Cost of Fuels

Cost of fuels decreased by $22 million during the three months ended March 31, 2023, compared to the same period in 2022, due to the sale of the Thermal Business on May 1, 2022.

Operations and Maintenance Expense

Operations and maintenance expense increased by $7 million during the three months ended March 31, 2023, compared to the same period in 2022, due to a combination of the drivers summarized in the table below:


		(In millions)

Renewables Segment	Increase primarily driven by the acquisition of the Capistrano Wind Portfolio in August 2022.	$	6
	Increase primarily driven by maintenance activities at the wind facilities.	5
Conventional Segment	Increase primarily driven by timing of annual planned maintenance outages at the El Segundo facility.	7
	Increase primarily driven by unplanned outages at the Walnut Creek and Marsh Landing facilities.	3
Thermal Segment	Decrease primarily driven by the sale of the Thermal Business on May 1, 2022.	(14)
		$	7

Other Income, Net

Other income, net increased $8 million during the three months ended March 31, 2023, compared to the same period in 2022, primarily due to higher interest income earned on larger cash balances with investments in money market and time deposit accounts. The larger cash balances at March 31, 2023, compared to March 31, 2022, were as a result of the proceeds received from the sale of the Thermal Business on May 1, 2022.

Interest Expense

Interest expense increased by $52 million during the three months ended March 31, 2023, compared to the same period in 2022, primarily due to the following:


	(In millions)
Change in fair value of interest rate swaps	$	62
Decrease in interest expense due to the sale of the Thermal Business on May 1, 2022	(5)
Decrease in interest expense due to decreased principal balances of Corporate debt, which includes repayment of the outstanding borrowings under the Bridge Loan Agreement and the revolving credit facility on May 3, 2022	(3)
Decrease in interest expense due to decreased principal balances of project-level debt	(2)
	$	52

Income Tax Benefit

For the three months ended March 31, 2023, the Company recorded an income tax benefit of $12 million on a pretax loss of $52 million. For the same period in 2022, the Company recorded an income tax benefit of $1 million on a pretax loss of $98 million. The $11 million increase in income tax benefit during the three months ended March 31, 2023, compared to the same period in 2022, was primarily due to the difference in allocation of taxable earnings and losses, which includes the effect of applying the HLBV method of accounting for book purposes for certain partnerships.

Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests

For the three months ended March 31, 2023, the Company had a net loss of $40 million attributable to noncontrolling interests and redeemable noncontrolling interests comprised of the following:


	(In millions)
Losses attributable to tax equity financing arrangements and the application of the HLBV method	$	(33)
CEG’s economic interest in Clearway Energy LLC	(10)
Income attributable to third-party partnerships	3

	$	(40)

For the three months ended March 31, 2022, the Company had a net loss of $65 million attributable to noncontrolling interests and redeemable noncontrolling interests comprised of the following:


	(In millions)
CEG’s economic interest in Clearway Energy LLC	$	(25)
Losses attributable to third-party partnerships	(22)
Losses attributable to tax equity financing arrangements and the application of the HLBV method	(18)
	$	(65)

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, service debt and pay dividends. 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.

Current Liquidity Position

As of March 31, 2023 and December 31, 2022, the Company’s liquidity was approximately $1.57 billion and $1.37 billion, respectively, comprised of cash, restricted cash and availability under the Company’s revolving credit facility.


(In millions)	March 31, 2023		December 31, 2022
Cash and cash equivalents:
Clearway Energy, Inc. and Clearway Energy LLC, excluding subsidiaries	$	451	$	536
Subsidiaries	125		121
Restricted cash:
Operating accounts	143		109
Reserves, including debt service, distributions, performance obligations and other reserves	294		230
Total cash, cash equivalents and restricted cash	1,013		996
Revolving credit facility availability	561		370
Total liquidity	$	1,574	$	1,366

The Company’s liquidity includes $437 million and $339 million of restricted cash balances as of March 31, 2023 and December 31, 2022, respectively. Restricted cash consists primarily of funds to satisfy the requirements of certain debt arrangements and funds held within the Company’s projects that are restricted in their use. As of March 31, 2023, these restricted funds were comprised of $143 million designated to fund operating expenses, approximately $168 million designated for current debt service payments and $97 million restricted for reserves including debt service, performance obligations and other reserves, as well as capital expenditures. The remaining $29 million is held in distribution reserve accounts.

Clearway Energy LLC and Clearway Energy Operating LLC Revolving Credit Facility

As of March 31, 2023, the Company had no outstanding borrowings under the revolving credit facility and $139 million in letters of credit outstanding. The facility will continue to be used for general corporate purposes including financing of future acquisitions and posting letters of credit.

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.

Sources of Liquidity

The Company’s principal sources of liquidity include cash on hand, cash generated from operations, proceeds from sales of assets, borrowings under new and existing financing arrangements and the issuance of additional equity and debt securities as appropriate given market conditions. As described in Note 7, Long-term Debt, to this Form 10-Q and Item 15 — Note 10, Long-term Debt, to the consolidated financial statements included in the Company’s 2022 Form 10-K, the Company’s financing arrangements consist of corporate level debt, which includes Senior Notes and the revolving credit facility, the ATM Program and project-level financings for its various assets.

Credit Ratings

Credit rating agencies rate a firm’s public debt securities. These ratings are utilized by the debt markets in evaluating a firm’s credit risk. Ratings influence the price paid to issue new debt securities by indicating to the market the Company’s ability to pay principal, interest and preferred dividends. Rating agencies evaluate a firm’s industry, cash flow, leverage, liquidity and hedge profile, among other factors, in their credit analysis of a firm’s credit risk.

The following table summarizes the credit ratings for the Company and its Senior Notes as of March 31, 2023:

S&P

Moody’s

Clearway Energy, Inc.

Ba2

4.750% Senior Notes, due 2028

Ba2

3.750% Senior Notes, due 2031

Ba2

3.750% Senior Notes, due 2032

Ba2

Uses of Liquidity

The Company’s requirements for liquidity and capital resources, other than for operating its facilities, are categorized as: (i) debt service obligations, as described more fully in Note 7, Long-term Debt; (ii) capital expenditures; (iii) off-balance sheet arrangements; (iv) acquisitions and investments, as described more fully in Note 3, Acquisitions and Dispositions; and (v) cash dividends to investors.

Capital Expenditures

The Company’s capital spending program is mainly focused on maintenance capital expenditures, consisting of costs to maintain the assets currently operating, such as costs to replace or refurbish assets during routine maintenance, and growth capital expenditures consisting of costs to construct new assets and costs to complete the construction of assets where construction is in process.

For the three months ended March 31, 2023, the Company used approximately $88 million to fund capital expenditures, including growth expenditures of $81 million in the Renewables segment, funded through construction-related financing. Renewables segment capital expenditures included $74 million incurred in connection with the Daggett 3 solar project and $7 million incurred in connection with the Waiawa solar project. In addition, the Company incurred $7 million in maintenance capital expenditures. The Company estimates $35 million of maintenance expenditures for 2023. These estimates are subject to continuing review and adjustment. Actual capital expenditures may vary from these estimates.

Acquisitions and Investments

The Company intends to acquire generation assets developed and constructed by CEG, as well as generation 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 business.

Waiawa Drop Down - In connection with the 2022 Drop Down of Waiawa, the Company assumed the project’s financing agreement, which includes a construction loan that converted to a term loan on March 30, 2023 upon the project reaching substantial completion and a tax equity bridge loan that was repaid on March 30, 2023.

Daggett 3 Drop Down — On February 17, 2023, the Company, through its indirect subsidiary, Daggett Solar Investment LLC, acquired the Class A membership interests in Daggett TargetCo LLC, the indirect owner of the Daggett 3 solar project for cash consideration of $21 million and then contributed its Class A membership interests into Daggett Renewable Holdco LLC, a partnership between the Company and a cash equity investor, which consolidates Daggett TargetCo LLC. Daggett TargetCo LLC consolidates, as the indirect owner of the primary beneficiary, a tax equity fund, Daggett TE Holdco LLC, which owns the Daggett 3 solar project. Daggett 3 has PPAs with investment-grade counterparties that have a 15-year weighted average contract duration that commence when the underlying operating assets reach commercial operations, which is expected to occur for the majority of the operating assets in the second quarter of 2023. The acquisition was funded with existing sources of liquidity.

Cash Dividends to Investors

The Company intends to use the amount of cash that it receives from its distributions from Clearway Energy LLC to pay quarterly dividends to the holders of its Class A common stock and Class C common stock. Clearway Energy 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. Dividends on the Class A common stock and Class C common stock are subject to available capital, market conditions and compliance with associated laws, regulations and other contractual obligations. The Company expects that, based on current circumstances, comparable cash dividends will continue to be paid in the foreseeable future.

The following table lists the dividends paid on the Company’s Class A common stock and Class C common stock during the three months ended March 31, 2023:


	First Quarter 2023
Dividends per Class A share	$	0.3745
Dividends per Class C share	0.3745

On May 3, 2023, the Company declared quarterly dividends on its Class A and Class C common stock of $0.3818 per share payable on June 15, 2023 to stockholders of record as of June 1, 2023.

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

As of March 31, 2023, the Company has several investments with an ownership interest percentage of 50% or less in energy and an energy-related entity that is accounted for under the equity method. GenConn is a variable interest entity 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 $320 million as of March 31, 2023. This indebtedness may restrict the ability of these subsidiaries to issue dividends or distributions to the Company.

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, as disclosed in the Company’s 2022 Form 10-K.

Cash Flow Discussion

The following table reflects the changes in cash flows for the comparative periods:


	Three months ended March 31,
	2023		2022		Change
	(In millions)
Net cash provided by operating activities	$	75	$	93	$	(18)
Net cash used in investing activities	(86)		(92)		6
Net cash provided by (used in) financing activities	28		(184)		212

Net Cash Provided by Operating Activities


Changes to net cash provided by operating activities were driven by:	(In millions)
Decrease in operating income adjusted for non-cash items	$	(19)
Decrease in distributions from unconsolidated affiliates	(5)
Increase in working capital primarily driven by the timing of accounts receivable collections and payments of accounts payable	6
	$	(18)

Net Cash Used in Investing Activities


Changes to net cash used in investing activities were driven by:	(In millions)


Decrease in cash paid for Drop Down Assets	$	44
Increase in the return of investment from unconsolidated affiliates	6
Increase in capital expenditures	(41)

Other	(3)
	$	6

Net Cash Provided by (Used in) Financing Activities


Changes in net cash provided by (used in) financing activities were driven by:	(In millions)
Increase in contributions from noncontrolling interest members, net of distributions	$	250
Cash released from escrow distributed to CEG in 2022	64
Decrease in proceeds from the revolving credit facility, net of payments	(60)
Decrease in proceeds from the issuance of long-term debt, net of payments	(39)
Increase in dividends paid to common stockholders and distributions paid to CEG unit holders	(6)




Other	3
	$	212

NOLs, Deferred Tax Assets and Uncertain Tax Position Implications, under ASC 740

As of December 31, 2022, the Company had a cumulative federal NOL carry forward balance of $481 million for financial statement purposes, of which $88 million will begin expiring in 2037 if unutilized. The Company does not anticipate material federal income tax payments until 2027. Additionally, as of December 31, 2022, the Company had a cumulative state NOL carryforward balance of $64 million for financial statement purposes, which will expire between 2023 to 2040 if unutilized. In addition, the Company has PTC and ITC carryforward balances totaling $18 million, which will expire between 2034 and 2042 if unutilized.

As a result of the sale of the Thermal Business, the Company, after the utilization of various state NOL carryforwards, has paid $9 million in state income taxes through March 31, 2023, and expects to pay approximately $19 million of additional state income taxes in the second quarter of 2023 related to the year ended December 31, 2022. The Company does not anticipate being subject to the corporate minimum tax on financial statement income as enacted by the recently passed the IRA, which is discussed in further detail below.

On February 9, 2022, the governor of California signed Senate Bill 113, or SB 113, removing the suspension of California NOL utilization for tax year 2022. After assessing the law change, the Company expects SB 113 to have an immaterial impact on the consolidated financial statements.

The recently enacted IRA contains a number of revisions to the Internal Revenue Code, including a 15% corporate minimum income tax for certain taxpayers, a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022 and business tax credits and incentives for the development of clean energy projects and the production of clean energy. The Company continues to analyze the potential impact of the IRA and monitor guidance to be issued by the United States Department of the Treasury, but it does not anticipate the corporate minimum tax will apply to it or that the IRA will otherwise have a material impact on its consolidated financial statements.

The Company is subject to examination by taxing authorities for income tax returns filed in the U.S. federal jurisdiction and various state jurisdictions. All tax returns filed by the Company for the year ended December 31, 2013 and forward remain subject to audit. As of December 31, 2022, the U.S federal partnership returns of three subsidiaries of the Company are under audit by the IRS. The IRS has issued proposed adjustments with respect to one of the subsidiaries under audit. The Company believes that such proposed adjustments are incorrect and, in any case, would not impact the Company’s tax liability or the tax liability of such subsidiary. The IRS has not yet issued any proposed adjustments with respect to the other two subsidiaries under audit. The Company believes that the ultimate settlement of each of these audits will not be material to the Company’s financial condition, results of operations or liquidity. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in tax audits of the Company are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

The Company has no material uncertain tax benefits as of March 31, 2023.

Fair Value of Derivative Instruments

The Company may enter into commodity purchase contracts and other energy-related financial instruments to mitigate variability in earnings due to fluctuations in spot market prices. In addition, in order to mitigate interest rate risk associated with the issuance of variable rate debt, the Company enters into interest rate swap agreements.

The tables below disclose the activities of non-exchange traded contracts accounted for at fair value in accordance with ASC 820. Specifically, these tables disaggregate realized and unrealized changes in fair value; disaggregate estimated fair values at March 31, 2023, based on their level within the fair value hierarchy defined in ASC 820; and indicate the maturities of contracts at March 31, 2023. For a full discussion of the Company’s valuation methodology of its contracts, see Derivative Fair Value Measurements in Note 5, Fair Value of Financial Instruments.


Derivative Activity (Losses) Gains	(In millions)
Fair value of contracts as of December 31, 2022	$	(264)
Contracts realized or otherwise settled during the period	13
Contracts acquired during the period	27


Changes in fair value	(20)
Fair value of contracts as of March 31, 2023	$	(244)


	Fair value of contracts as of March 31, 2023
	Maturity
Fair Value Hierarchy (Losses) Gains	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	$	27	$	27	$	21	$	15	$	90
Level 3	(39)		(89)		(86)		(120)		(334)
Total	$	(12)	$	(62)	$	(65)	$	(105)	$	(244)

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.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements and related disclosures in compliance with GAAP requires the application of appropriate technical accounting rules and guidance, as well as the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. The application of these policies necessarily involves judgments regarding future events, including the likelihood of success of particular projects, legal and regulatory challenges and the fair value of certain assets and liabilities. These judgments, in and of themselves, could materially affect the financial statements and disclosures based on varying assumptions, which may be appropriate to use. In addition, the financial and operating environment may also have a significant effect, not only on the operation of the business, but on the results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even if the nature of the accounting policies has not changed.

On an ongoing basis, the Company evaluates these estimates, utilizing historic experience, consultation with experts and other methods the Company considers reasonable. 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 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, accounting utilizing Hypothetical Liquidation at Book Value, or HLBV, acquisition accounting and determining the fair value of financial instruments.

Recent Accounting Developments

See Note 2, Summary of Significant Accounting Policies, for a discussion of recent accounting developments.

ITEM 3 — 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. The following disclosures about market risk provide an update to, and should be read in conjunction with, Item 7A — Quantitative and Qualitative Disclosures About Market Risk, of the Company’s 2022 Form 10-K.

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 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. 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 MWh increase or decrease in power prices across the term of the derivatives contracts would cause a change of approximately $7 million to the net value of power derivatives as of March 31, 2023.

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. See Note 6, Derivative Instruments and Hedging Activities, for more information.

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 10, Long-term Debt, to the Company’s audited consolidated financial statements for the year ended December 31, 2022 included in the 2022 Form 10-K for more information about interest rate swaps of the Company’s project subsidiaries.

If all of the interest rate swaps had been discontinued on March 31, 2023, the counterparties would have owed the Company $98 million. Based on the credit ratings 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 March 31, 2023, a change of 1%, or 100 basis points, in interest rates would result in an approximately $1 million change in market interest expense on a rolling twelve-month basis.

As of March 31, 2023, the fair value of the Company’s debt was $6.76 billion and the carrying value was $7.20 billion. The Company estimates that a decrease of 1%, or 100 basis points, in market interest rates would have increased the fair value of its long-term debt by approximately $362 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. See Note 5, Fair Value of Financial Instruments, to the consolidated financial statements for more information about concentration of credit risk.

ITEM 4 — Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

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 Quarterly Report on Form 10-Q.

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) during the quarter ended March 31, 2023 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

For a discussion of the material legal proceedings in which the Company was involved through March 31, 2023, see Note 12, Contingencies, to this Form 10-Q.

ITEM 1A — RISK FACTORS

Information regarding risk factors appears in Part I, Item 1A, Risk Factors, in the Company’s 2022 Form 10-K. There have been no material changes in the Company’s risk factors since those reported in its 2022 Form 10-K.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 — DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 — MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 — OTHER INFORMATION

None.

ITEM 6 — EXHIBITS

Number

Description

Method of Filing

4.1

Twelfth Supplemental Indenture, dated as of February 14, 2023, among Clearway Energy Operating LLC, the guarantors named therein and Delaware Trust Company.

Incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 21, 2023.

4.2

Fourth Supplemental Indenture, dated as of February 14, 2023, among Clearway Energy Operating LLC, the guarantors named therein and Delaware Trust Company.

Incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 21, 2023.

4.3

Third Supplemental Indenture, dated as of February 14, 2023, among Clearway Energy Operating LLC, the guarantors named therein and Delaware Trust Company.

Incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on February 21, 2023.

10.1

Amended and Restated Master Services Agreement, dated as of February 2, 2023, by and among Clearway Energy Group LLC, Clearway Energy, Inc., Clearway Energy LLC and Clearway Energy Operating LLC.

Incorporated herein by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K filed on February 23, 2023.

10.2

Amended and Restated Master Services Agreement, dated as of February 2, 2023, by and among Clearway Energy, Inc., Clearway Energy LLC, Clearway Energy Operating LLC and Clearway Energy Group LLC.

Incorporated herein by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K filed on February 23, 2023.

10.3*

Eighth Amendment to Amended and Restated Credit Agreement, entered into as of March 15, 2023, by and among Clearway Energy Operating LLC, Clearway Energy LLC, the guarantors party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 20, 2023.

31.1

Rule 13a-14(a)/15d-14(a) certification of Christopher S. Sotos.

Filed herewith.

31.2

Rule 13a-14(a)/15d-14(a) certification of Sarah Rubenstein.

Filed herewith.

Section 1350 Certification.

Furnished herewith.

101 INS

Inline XBRL Instance Document.

Filed herewith.

101 SCH

Inline XBRL Taxonomy Extension Schema.

Filed herewith.

101 CAL

Inline XBRL Taxonomy Extension Calculation Linkbase.

Filed herewith.

101 DEF

Inline XBRL Taxonomy Extension Definition Linkbase.

Filed herewith.

101 LAB

Inline XBRL Taxonomy Extension Label Linkbase.

Filed herewith.

101 PRE

Inline XBRL Taxonomy Extension Presentation Linkbase.

Filed herewith.

104

Cover Page Interactive Data File (the cover page interactive data file does not appear in Exhibit 104 because its Inline XBRL tags are embedded within the Inline XBRL document).

Filed herewith.

* Schedules and similar attachments to this Exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

CLEARWAY ENERGY, INC.
(Registrant)

/s/ CHRISTOPHER S. SOTOS

Christopher S. Sotos

President and Chief Executive Officer

(Principal Executive Officer)

/s/ SARAH RUBENSTEIN

Sarah Rubenstein

Date: May 4, 2023

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

Document

EXHIBIT 31.1

CERTIFICATION

I, Christopher S. Sotos, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Clearway Energy, 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/ CHRISTOPHER S. SOTOS
Christopher S. Sotos President and Chief Executive Officer (Principal Executive Officer)

Date: May 4, 2023

Document

EXHIBIT 31.2

CERTIFICATION

I, Sarah Rubenstein, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Clearway Energy, Inc.;

(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/ SARAH RUBENSTEIN
Sarah Rubenstein Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Date: May 4, 2023

Document

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 Quarterly Report of Clearway Energy, Inc. on Form 10-Q for the quarter ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), 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-Q 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-Q 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-Q.

Date: May 4, 2023

/s/ CHRISTOPHER S. SOTOS

Christopher S. Sotos

President and Chief Executive Officer

(Principal Executive Officer)

/s/ SARAH RUBENSTEIN

Sarah Rubenstein

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and 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-Q 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 Clearway Energy, Inc. and will be retained by Clearway Energy, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.