Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

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



	Year Ended December 31,
	2016			2015			2014
	(In millions, except percentages)
Current
State	$	17		$	6		$	8
Total — current	17			6			8
Deferred
U.S. Federal	3			1,020			(50		)
State	(6		)	315			41
Foreign	2			1			4
Total — deferred	(1		)	1,336			(5		)
Total income tax expense	$	16		$	1,342		$	3
Effective tax rate	(1.8		)%	(26.3		)%	2.2		%

The following represents the domestic and foreign components of income/(loss) before income tax expense/(benefit):

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



	Year Ended December 31,
	2016			2015			2014
	(In millions, except percentages)
(Loss)/income before income taxes	$	(875	)	$	(5,094	)	$	135
Tax at 35%	(306		)	(1,783		)	47
State taxes	11			(218		)	9
Foreign operations	10			1			1
Federal and state tax credits, excluding PTCs	—			(5		)	(1		)
Valuation allowance	306			3,039			6
Impact of non-taxable equity earnings	22			(10		)	(11		)
Book goodwill impairment	—			340			—
Net interest accrued on uncertain tax positions	1			(3		)	(2		)
Production tax credit	(26		)	(33		)	(48		)
Recognition of uncertain tax benefits	2			(15		)	(30		)
Tax expense attributable to consolidated partnerships	(1		)	12			4
Impact of change in effective state tax rate	1			19			22
Other	(4		)	(2		)	6
Income tax expense	$	16		$	1,342		$	3
Effective income tax rate	(1.8		)%	(26.3		)%	2.2		%

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



	As of December 31,
	2016			2015
	(In millions)
Deferred tax liabilities:
Emissions allowances	$	30		$	31
Derivatives, net	—			22
Cumulative translation adjustments	11			2
Investment in projects	374			838
Total deferred tax liabilities	415			893
Deferred tax assets:
Deferred compensation, accrued vacation and other reserves	318			255
Discount/premium on notes	45			68
Difference between book and tax basis of property	1,511			1,210
Goodwill	83			39
Differences between book and tax basis of contracts	301			516
Pension and other postretirement benefits	183			218
Equity compensation	11			50
Bad debt reserve	12			6
U.S. capital loss carryforwards	1			1
U.S. Federal net operating loss carryforwards	1,171			1,373
Foreign net operating loss carryforwards	63			59
State net operating loss carryforwards	223			230
Foreign capital loss carryforwards	1			1
Deferred financing costs	4			6
Federal and state tax credit carryforwards	446			439
Federal benefit on state uncertain tax positions	12			17
Intangibles amortization (excluding goodwill)	211			90
Derivatives, net	101			—
Inventory obsolescence	31			27
Other	8			11
Total deferred tax assets	4,736			4,616
Valuation allowance	(4,116		)	(3,575		)
Total deferred tax assets, net of valuation allowance	620			1,041
Net deferred tax asset	$	205		$	148

The following table summarizes NRG's net deferred tax position:



	As of December 31,
	2016			2015
	(In millions)
Net deferred tax asset — noncurrent	$	225		$	167
Net deferred tax liability — noncurrent	(20		)	(19		)
Net deferred tax asset	$	205		$	148

The following table reconciles the total amounts of uncertain tax benefits:



	As of December 31,
	2016			2015
	(In millions)
Balance as of January 1	$	32		$	71
Increase due to current year positions	8			4
Decrease due to prior year positions	—			(25		)
Decrease due to settlements and payments	(6		)	(18		)
Uncertain tax benefits as of December 31	$	34		$	32