Larry Coben, NRG Energy CEO, joins 'Money Movers' to discuss the company's $12 billion deal to acquire assets from LS Power and impact from tariffs.

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Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

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NRG Energy has announced a $12 billion deal to acquire natural gas generation facilities and other assets from LS Power, a move that will significantly expand the company's operations across North America. According to CEO Larry Coben, the acquisition will double the size of NRG’s generation fleet and enhance the company’s ability to provide solutions for residential, commercial, and institutional customers. The company expects the transaction to support growth in virtual power plants and accelerate overall expansion.

Coben emphasized that electricity demand is experiencing unprecedented growth due to trends like increased data center usage, onshoring of manufacturing, and greater electrification in homes and businesses. He noted that this heightened demand underpins the financial soundness of the acquisition and supports NRG’s ongoing investments, shareholder returns, and credit profile.

Regarding tariffs, Coben stated that NRG has not yet seen an impact on equipment or project timelines. He indicated that if tariffs do affect costs, such changes would likely be reflected in power purchase agreements across the industry. Coben expressed confidence that rising electricity demand would offset any potential tariff impacts, ensuring continued business growth.



NRG Energy CEO: Energy demand will offset any tariff impact

Take a look at shares of NRG Energy, surging 25% this morning after delivering an earnings beat in Q1, announcing this $12 billion deal to acquire natural gas generation facilities and some other assets from LS Power, helping expand the company's footprint, which already serves more than 8 million customers across North America. Joining us this morning in a CNBC exclusive is NRG Energy CEO Larry Kovan. Larry, congratulations. Thanks for coming on the show. Thank you for having me, Carl. Great to be here. Talk about how this came together and what it does do for the footprint. I think it does a lot of things for us, Carl. First of all, it doubles the size of our generation fleet and really enhances our ability to provide customized solutions for our customers, both at the home retail level as well as the commercial and institutional side of the business. It gives us a tremendous platform as well for virtual power plants that we're very, very excited about. And of course, it's an exceptionally accretive transaction. So we think it really positions us for exceptionally faster growth than we had been projecting before and puts us in a sustainable growth pattern for years to come. I'm just thinking about the timing of this deal, given all these sort of macro uncertainties, and yet the offsetting stability of what we think are these long-term data center trends. Was that a difficult needle to thread? It's always a difficult needle to thread, but I think what's important is the demand growth for electricity is real. I've been in this business 40 years. We have never seen a demand super cycle of the type we're seeing right now. Data centers are a part of that. So are other large loads. So is onshoring of manufacturing. So is just retail growth and the electrification of things in the home and in the office. So the demand growth is real. So while there may be shorter-term economic fluctuations and uncertainty, long-term energy, electricity growth is not going away in any way, shape or form. You mentioned that this acquisition enhances your credit profile and mitigates key financial risks. How incumbent is that demand on kind of that risk profile, as well as your commitment to the buyback? As I see, your stock is at record highs and just light years above where it was just a few years ago. Yeah. Look, I think the nature of this transaction, we are throwing off an enormous amount of cash from our operations. Both our power plants, the plants that we're going to acquire, our retail business, all of them are performing at an exceptionally high level. Sort of lost in the news is we had a tremendous first quarter beat in terms of our earnings for the quarter. As a result of that, we're very confident we have plenty of money both for the growth investments that we need going forward, but also to continue to return capital to our shareholders because it is their money and we're very happy to give it back to them. From a credit point of view, having more generation capacity and relying less on market purchases really enables us to maintain a higher leverage ratio, which also enhances our cash flow. How do you think about the impact? I know there's a lot of headlines just this morning alone on tariffs, but how do you think about tariffs as it pertains to some of your new builds and new projects and the overall costs of those? Does it impact your timeline at all? Does it impact your margins at all or at least what you were planning to spend on those? It doesn't really impact our timelines at all. We haven't yet seen any tariff impact on equipment. If there is some, obviously that will be impacting everybody and that will have to be passed through in power purchase agreements. So we don't see it as a significant driver or a significant impediment to growing our business going forward. We think the demand growth and people's need for electricity will more than offset any impact that the tariffs might have.

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