Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Lightning Power, LLC (Company), a Delaware limited liability company, was formed on June 21, 2024 to own, finance, develop, and manage a diverse portfolio of power generation facilities across the United States and is wholly owned by Lightning Power Holdings, LLC (Lightning Holdings). Lightning Holdings is directly owned by Fund III Lightning Holdings, LLC (Fund III Holdings) and Gridiron Holdings, LLC (Gridiron Holdings). Fund III Holdings and Gridiron Holdings own 68% and 32%, respectively, Class A common units of Lighting Holdings. Fund III Holdings is indirectly owned, through various holding companies, by Granite Energy, LLC (Granite) and Helix Generation, LLC (Helix). Gridiron Holdings is indirectly owned, through various holding companies, by Gridiron Energy, LLC (Gridiron).

On August 9, 2024, Gridiron, Helix, and Granite contributed 100% ownership interest in their respective generation facilities to the Company. Additionally on the same date, Helix contributed 100% ownership in Rise Light & Power, LLC and subsidiaries (Rise), which was formed to identify, evaluate, and develop investment opportunities within the power industry (collectively, “Contribution Transaction”) (See Note 3). Rise maintains its dedicated workforce.

These consolidated financial statements reflect the period from August 9, 2024 through December 31, 2024 in accordance with the Contribution Transaction. These consolidated statements reflect all Company activity, which began with the Contribution Transaction.

The Generation Facilities that were included in the Company during 2024 are described below:

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

The consolidated financial statements and related notes are presented in accordance with U.S. generally accepted accounting principles (U.S. GAAP). These consolidated financial statements reflect the consolidated balance sheet as of December 31, 2024, consolidated statements of operations, member’s equity, and cash flows of the Company for the period from August 9, 2024 to December 31, 2024. All intercompany transactions have been eliminated in the consolidated financial statements.

The reporting period begins on August 9, 2024, which is the date the equity interests of Granite, Gridiron, and Helix were contributed to the Company (See Note 3).

These consolidated financial statements and notes reflect the Company’s evaluation of events occurring subsequent to December 31, 2024, through May 5, 2025, the date the consolidated financial statements were issued.

Management makes estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities and reported amounts of revenues and expenses to prepare the consolidated financial statements in conformity with U.S. GAAP. The most significant of these estimates and assumptions relate to the valuation of acquired assets and assumed liabilities in connection with business combination, derivative instruments, and asset retirement obligations. Actual results could differ materially from those estimates.

Restricted cash consists of amounts that are restricted under the terms of certain financing agreements from transfer or dividend until such time as certain conditions are met. Such restricted cash is used primarily for operating expenses and debt service.

Accounts receivable primarily consists of amounts owed to the Generation Facilities for electric energy delivered to independent system operators (ISO), including PJM Interconnection LLC (PJM), ISO-New England Inc. (ISO-NE), and New York Independent System Operator (NYISO) under the energy management agreements (see Note 8a). Accounts receivable also consists of amounts owed to the Generation Facilities from the ISOs for delivered capacity, as well as for hedge settlement fuel sales, and bilateral capacity settlements from energy marketers or other counterparties.

Management establishes reserves on accounts receivable if it becomes probable that the Company will not collect part of the outstanding accounts receivable balance. Management reviews collectability and establishes or adjusts its allowance using the specific identification method.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Inventory consists of fuel oil, natural gas, and spare parts used in the production of electricity. Inventory is stated at the lower of weighted average cost or net realizable value. The carrying value of both fuel oil and natural gas inventories will be recovered with normal profits in the ordinary course of business through the generation and sale of energy. As of December 31, 2024, spare parts inventory, natural gas, and fuel oil were $74.2 million, $521 thousand, and $47.8 million, respectively.

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated remaining useful lives of individual assets or classes of assets. Plant and equipment are depreciated over the estimated useful life of the power generation facilities for 20 years. The estimated useful life for computer software is 3 years, computer hardware is 5 years, vehicles are 5 years, warehouse storage structure is 10 years, mechanical and electrical tools are 5 years and office equipment and furniture and fixtures are 7 years. Property, plant, and equipment also includes capital spares inventory available for use in planned major maintenance. Additions and improvements extending asset lives beyond their remaining estimated useful lives are capitalized, while repairs and maintenance, including planned major maintenance and capital spares, are charged to expense as incurred.

In accordance with FASB ASC 360, Property, Plant, and Equipment, long-lived assets and intangible assets with determinable useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets and would be charged to earnings. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the costs to sell.

On Acquisition Date, the Company recorded an asset management agreement at fair value. The contract is recorded as an intangible asset on the accompanying consolidated balance sheet. The intangible asset is being amortized using the straight-line method over the term of the contract as a reduction in Energy and capacity revenues on the accompanying consolidated statement of operations. Amortization of the intangible asset for the period from August 9, 2024 to December 31, 2024 totaled $628 thousand. Amortization for each of the next five years is $1.6 million.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Goodwill represents, at the time of an acquisition, the amount of the purchase price paid in excess of the fair value of the net assets acquired (See Note 4). In accordance with FASB ASC 350, Intangibles— Goodwill and Other (ASC 350), the Company will evaluate goodwill for impairment on an annual basis and when events warrant an assessment.

In accordance with ASC 410, Asset Retirement Obligations and Environmental Obligations, the Company recognizes the fair value of the liability for asset retirement obligations in the period in which it is incurred if a reasonable estimate of fair value can be made. An amount equal to the present value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the useful life of the asset. The liability is accreted through charges to Accretion in the accompanying consolidated statement of operations. If the obligation is settled for an amount other than the carrying amount of the liability, a gain or loss is recognized upon settlement. As of December 31, 2024, the Company has a liability of approximately $68.5 million for asset retirement obligations to provide for the future removal and dismantling of certain generation facilities. Accretion expense was $2.1 million for the period from August 9, 2024 to December 31, 2024.

In accordance with FASB ASC 842, Leases, the Company evaluates each contract at inception to determine if it contains a lease. The Company considers a contract to be a lease when an asset is either explicitly or implicitly identified in the contract; and the contract conveys to the Company the right to control the use of the identified asset during the contract period. Operating leases are included in Operating lease right-of-use assets, net and Operating lease liabilities in the Company’s consolidated balance sheet.

Operating lease right-of-use assets represent our right to use an underlying asset for the lease term, and operating lease liabilities represent our obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Renewal options that are reasonably certain to be exercised are included in the lease term. In determining the present value of the future lease payments, the Company uses the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, over a similar term an amount equal to the payments for the lease. Short-term leases, leases with a term of 12 months are less at inception, are not recorded on the Company’s consolidated balance sheet. Lease expenses for all operating leases are expensed on a straight-line basis over the lease term on the Company’s consolidated statement of income. (See Note 9).

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Debt issuance and deferred financing costs are amortized over the term of the Company’s financing arrangements using effective interest method. Unamortized debt issuance and deferred financing costs are reflected as a components of Current portion of long term debt and Long term debt on the accompanying consolidated balance sheet.

Certain Generation Facilities are located in states that participate in the Regional Greenhouse Gas Initiative (RGGI) to reduce greenhouse gas emissions. The Company is required to possess RGGI allowances equal to its CO2 emissions over a three-year control period. The Company must hold allowances equal to 50% of its emissions during each interim control period (the first two calendar years of each three-year control period), and 100% of all three years’ allowances must be surrendered by March 1 after the three-year control period. The Company records RGGI allowances as other current assets or other current liabilities at the weighted-average cost or fair market value, respectively, on the accompanying consolidated balance sheet.

Due to market fluctuations in value, the value of the liability for the RGGI allowances recorded on the Company’s accompanying consolidated balance sheet may not reflect the final cost of the surrendered RGGI allowances. RGGI allowances are charged to Fuel and transportation on the accompanying consolidated statement of operations when the Generation Facility operates. As of December 31, 2024, the Company had a RGGI allowance liability of $23.3 million, which is included in Other current liabilities on the accompanying consolidated balance sheet. For the period from August 9, 2024 to December 31, 2024, RGGI allowance expense was $16.7 million, which is reflected as a component of Fuel and transportation expense in the accompanying consolidated statement of operations.

The Company enters into futures contracts whereby the Company agrees to purchase RGGI allowances at a fixed price to be physically delivered on a future date. These contracts meet the definition of a derivative in accordance with ASC 815, Derivatives and Hedging (ASC 815) (see Note 11).

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Capacity revenue is recognized over time as the Company satisfies its performance obligation of maintaining available generation capacity at negotiated contract terms. Energy revenue consists of physical and financial transactions and is recognized when the performance obligation is satisfied upon delivery of electricity to customers. Physical transactions are recorded on a gross basis in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606), as the Company controls the specified electricity before transfer to customers. The Company has elected to apply the practical expedient to recognize revenue in the amount it has the right to invoice for both capacity and energy revenue, as this represents the value transferred to customers. For the period from August 9, 2024 to December 31, 2024, capacity revenue amounted to $162.6 million, which is reflected as a component of Energy and capacity revenues in the accompanying consolidated statement of operations.

The Company enters into agreements that meet the definition of a derivative in accordance with ASC 815. These agreements are entered into to mitigate or eliminate market and financial risks. ASC 815 provides for three different ways to account for derivative instruments: (i) as an accrual agreement, if the criteria for the “normal purchase normal sale” exception are met and documented;(ii) as a cash flow or fair value hedge, if the specified criteria are met and documented; or (iii) as a mark-to-market agreement with changes in fair value recognized in current period earnings. All derivative instruments that do not qualify for the normal purchase normal sale exception are recorded at fair value in risk management assets and liabilities on the accompanying consolidated balance sheet.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

If designated as a cash flow or fair value hedge, the Company documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy. This process includes linking all derivatives that are designated as hedges to specific assets or liabilities on the accompanying consolidated balance sheets or to forecasted transactions. The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. This could occur when: (1) it is determined that a derivative is no longer effective in offsetting changes in the cash flows of a hedged item; (2) the derivative expires or is sold, terminated, or exercised; or (3) the derivative is discontinued as a hedging instrument, because it is unlikely that a forecasted transaction will occur. When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective hedge of cash flows, the derivative will continue to be carried at fair value on the accompanying consolidated balance sheet and the gains and losses that were accumulated in other comprehensive income are recognized immediately or over the remaining term of the forecasted transaction in the accompanying consolidated statement of operations.

Changes in the fair value of derivative instruments are either recognized in the accompanying consolidated statement of operations or consolidated statement of comprehensive income as a component of other comprehensive income, depending upon their use and designation.

Gains and losses related to transactions that qualify for hedge accounting are recorded in the accompanying consolidated statement of comprehensive income as a component of other comprehensive income and shown in the aggregate in accumulated other comprehensive income (AOCI) in the accompanying consolidated statement of member’s equity and will flow through the accompanying consolidated statement of operations in the period the hedged item affects earnings.

Otherwise, any gains and losses resulting from changes in the market value of the derivative instruments contracts are recorded in the accompanying consolidated statement of operations in the current year.

The Company has no items of other comprehensive income for the period presented and, accordingly, comprehensive income is equal to net income.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Fair value, as defined in ASC 820, Fair Value Measurements and Disclosures (ASC 820), is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, the valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs.

The carrying amounts of Restricted cash, Accounts receivable, and Accounts payable and accrued expenses are equal to or approximate their fair values due to the short-term maturity of those instruments.

Long-term debt consists of a variable term loan and fixed rate notes. The carrying value and fair value of the variable term loan were both $ 1.75 billion as of December 31, 2024, as the interest rates are variable. The carrying amount and fair value of the fixed rate notes were $1.5 billion and $1.44 billion, respectively.

In accordance with ASC 323, Investments Equity Method and Joint Ventures, the Company applies the equity method of accounting to investments in which it has significant influence, but not a controlling financial interest (see Note 5). Under the equity method, the Company initially records the investment at cost and adjusts the carrying amount to recognize the Company's share of the earnings or losses of the investee after the acquisition date. The Company's share of the investee's earnings or losses is recognized in the Company's income statement. Distributions received from the investee reduce the carrying amount of the investment. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.

The Company consists of entities that have been organized as a limited liability company and is treated as a disregarded entity for federal and state income tax purposes. Therefore, federal and state income taxes are assessed at the member’s level.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of restricted cash, accounts receivable, and derivatives. Restricted cash accounts are generally held at major institutions. Accounts receivable is concentrated within entities engaged in the energy industry. These industry concentrations may impact the Company’s overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic, industry, or other conditions.

The Company is exposed to credit losses in the event of noncompliance by counterparties on its derivative financial instruments. The counterparties to these transactions are major financial institutions. The Company does not require collateral or other security to support its financial instruments with credit risk. For the period August 9, 2024 to December 31, 2024, 93%, 2%, and 5% of revenues consisted of sales to ISOs, bilateral sales, and hedge settlements, respectively. All revenues are subject to geographical market risks.

The Company is subject to a variety of factors, including the economy, the regulatory environment, the electricity markets, and the availability of capital resources. As with any power generation facility, operations of the Company’s Generation Facilities involve risk, including the performances of the facilities below expected levels of efficiency and output, shut downs due to the breakdown or failure of equipment or processes, violations of permit requirements, operator error, labor disputes, weather interferences, or catastrophic events such as fires, earthquakes, floods, explosions, pandemics, or other similar occurrences affecting a power generation facility or its power purchasers. The occurrence of any of these events could significantly reduce or eliminate revenues generated by the facilities or significantly increase the expenses of the facilities, adversely impacting the Company’s ability to make payments of principal and interest on its debt when due.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

In accordance with ASC 450, Contingencies, the Company records a loss contingency for matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Loss contingency reserves are based on estimates and judgments made by management with respect to the likely outcome of matters, including any applicable insurance coverage for litigation matters, and are adjusted as circumstances warrant. These estimates and judgments could change based on new information, changes in laws or regulations, changes in management’s plans or intentions, the outcome of legal proceedings, settlements or other factors.

Additionally, the Company follows the guidance of ASC 460, Guarantees (ASC 460), for disclosing and accounting of guarantees and indemnifications entered into during the course of business. When a guarantee or indemnification subject to ASC 460 is entered into the estimated fair value of the guarantee or indemnification is assessed. Some guarantees and indemnifications could have a financial impact under certain circumstances. Management considers the probability of such circumstances occurring when estimating fair value.

On August 9, 2024 (Acquisition Date), the Company acquired 100% interest in certain generation facilities in connection with the Contribution Transaction (See Note 1). The Company was the accounting acquirer in the transaction as it was a substantive entity and obtained controlling financial interests, as defined in ASC 810, in each of the Generation Facilities via the contribution of their equity in exchange for the equity of the Company, and the transaction was not among entities under common control. The Company recognized transaction costs of approximately $8.8 million within selling, general, and administrative expenses in the consolidated statement of operations.

In accordance with ASC 805, Business Combinations (ASC 805), the acquisition was determined to be a business combination and the acquired assets and assumed liabilities were recorded at fair value, which resulted in Net assets acquired of $4.5 billion as of the Acquisition Date. The excess of the purchase price over the fair value of identifiable net assets acquired was recorded as goodwill (See Note 4).

Fair values were determined primarily by an independent third-party valuation. The measurement approach utilized to fair value the assets acquired was the income approach using a discounted cash flow model for property, plant and equipment, intangible assets and asset retirement obligations. The fair values of property, plant and equipment, intangible assets, as well as other assets and liabilities have been finalized based on the facts and circumstances that existed as of the Acquisition Date. The fair value of long term debt approximated its book value as of August 9, 2024 as the interest rates are variable, with the exception of fixed rate notes (See Note 10). Derivative instruments were valued in accordance with the Company’s policy as of the acquisition date. For the remaining of the net assets acquired, book value approximated fair value given the short-term nature and quick turn of the related assets and liabilities.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

The following table summarizes the fair values of assets acquired and liabilities assumed at the Acquisition Date (in millions):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

As part of the business combination completed on Acquisition Date and accounted for under ASC 805, the Company recognized goodwill of $128 million.

The recognized goodwill is predominantly attributable to the acquired Rise development platform that did not meet the recognition criteria for separate identifiable intangible assets under ASC 805 and ASC 350. The development platform incorporates the underlying processes, expertise, and capabilities that enable Rise to utilize interconnection and other arrangements of a certain generation facility for future growth initiatives. While not separately recognizable under U.S. GAAP, these initiatives represent significant future economic benefits expected to be derived from the integration of the acquired development platforms.

Management applies judgment in assessing the recoverability of goodwill. Goodwill is not amortized but is subject to an annual impairment test in accordance with ASC 350, or more frequently if events or changes in circumstances indicate potential impairment.

The Company holds a 16.3% equity interest in Attentive Energy LLC (Attentive). The Company accounts for this investment using the equity method of accounting as the Company exercises significant influence, but not control over the Attentive's operating and financial policies. At the Acquisition Date, the Company performed a fair value assessment of this investment and determined the fair value to be $0. There was no material operating activity in Attentive from the Acquisition Date through December 31, 2024 and the investment's carrying value remained at $0 as of December 31, 2024. See Note 7 regarding loan receivable from Attentive.

Property, plant and equipment are stated at cost less accumulated depreciation. As of December 31, 2024, Property, plant and equipment, net consisted of the following (in thousands):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

For the period from August 9, 2024 to December 31, 2024, depreciation expense for property, plant and equipment was approximately $132.2 million.

Other noncurrent assets primarily consists of initial loan that was made by Rise to Attentive. The loan accrues interest at 7% per annum and expires December 31, 2027. As of December 31, 2024, the Company had a loan receivable of $135.9 million plus accrued interest.

The Company has entered into several energy management agreements (EMAs) with various counterparties to provide comprehensive power management services, including scheduling, dispatch, and delivery of energy, as well as fuel and risk management services for its generation facilities. These counterparties are responsible for scheduling the natural gas supply required to operate the respective generation facilities and coordinating the sale of power, capacity, and ancillary services.

For the period from August 9, 2024 to December 31, 2024, the Company incurred costs under the EMAs of $1.5 million, which is recorded in General and administrative expense on the accompanying consolidated statement of operations.

The Company has entered into several operations and maintenance (O&M) agreements with various counterparties to provide comprehensive operation and maintenance services for its generation facilities. Under these agreements, the Company pays a fixed monthly operating fee, which is subject to an annual adjustment based on specified indices. Additionally, the Company pays an annual incentive fee and reimburses the operators for all labor costs, including payroll, related taxes, and other incurred costs.

For the period from August 9, 2024 to December 31, 2024, the Company incurred fixed costs under the O&M agreements of $2.0 million, which are recorded under General and administrative expenses, and incurred $ 27.5 million of other labor costs, which is recorded in Operating and maintenance expense in the accompanying consolidated statement of operations. Under the terms of a certain agreement, the Company issued Letters of Credit (LOC) in the amount of $2.5 million.

The Company has entered into several asset management and fuel supply agreements with various counterparties to provide fuel transportation and management services to the Generation Facilities. The following summarizes the terms in those agreements:

Certain Generation Facilities have separate fuel supply agreements with Sequent Energy Management, L.P. (Sequent). This agreement calls for Sequent to provide certain fuel management services and to be the gas supplier to the plant. Quantities purchased will be agreed between the plant and Sequent on the applicable pipelines and will be priced according to the transaction confirm in the contract.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Certain Generation Facilities have separate fuel supply agreements with NRG Business Marketing, LLC (NRG). This agreement calls for NRG to provide certain fuel management services and to be the gas supplier to the plant. Quantities purchased will be agreed between the plant and NRG on the applicable pipelines and will be priced according to the transaction confirm in the contract.

Springdale Energy, LLC (Springdale) has an asset management with Range Resources-Appalachia, LLC (Range). The Company shall release to Range the firm transportation capacity an amount specified in the agreement. Range agrees to pay the Company for each month of the term of the released capacity. Released capacity must be used by Range to first serve gas supply obligations to Springdale to the delivery point and shall have the right to utilize the remainder for its purposes.

Chambersburg Energy, LLC has a fuel supply agreement with Shell Energy North America (US), L.P. (Shell). This agreement calls for Shell to schedule gas with Texas Eastern Transmission Corporation for deliveries to the delivery points. This contract may be terminated on 30 Days written notice but shall remain in effect until the expiration of the latest delivery period.

Riverside Generating Company, LLC has a fuel supply agreement with NextEra Energy Marketing, LLC (NextEra). This agreement calls for NextEra to schedule gas with Tennessee Gas Pipeline Company, LLC for deliveries to the delivery points. This contract expires October 31, 2025 and has automatic one year renewal periods until either party cancels.

Armstrong has a call option agreement with BP Energy Company to buy natural gas at an index price plus transportation charges for a maximum daily amount specified in the agreement. For the period from August 9, 2024 to December 31, 2024, the Company incurred costs under the physical gas call option agreements of $974 thousand, which is recorded in Fuel and transportation expense in the accompanying consolidated statement of operations.

For the period from August 9, 2024 to December 31, 2024, the Company incurred costs under the asset management and fuel supply agreements of $152.5 million, which is recorded in Fuel and transportation expense in the accompanying consolidated statements of operations. Under the terms of a certain agreement, the Company issued a LOC in the amount of $400 thousand.

Certain Generation Facilities have firm gas transportation and storage agreements with various counterparties. These agreements call for the counterparties to deliver natural gas, not to exceed the daily maximum, to a specific interconnection point, specified in the respective agreements.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Helix Ravenswood, LLC (Ravenswood) has gas transportation, balancing service, and fuel oil agreements with Consolidated Edison Company of New York, Inc. (“Con Edison”). The gas transportation and balancing service agreement with Con Edison allows for an agreed upon amount per day, with Ravenswood paying fixed and variable charges, continuing month-to-month unless terminated. The fuel oil supply agreement with Con Edison involves Ravenswood supplying, storing, and handling fuel oil, with Con Edison paying handling fees and costs based on delivery quantities, expiring in 2098 or when certain facilities cease operations. Furthermore, Ravenswood has a contract with Con Edison and NYISO to use fuel oil instead of natural gas for electricity generation, with NYISO providing fixed monthly payments. During the period from August 9, 2024 to December 31, 2024, the Company earned $9.5 million, which are recorded as Other revenue on the accompanying consolidated statement of operations.

For the period from August 9, 2024 to December 31, 2024, the Company incurred costs under the gas transportation agreements of $24.7 million, which is recorded in Fuel and transportation expense in the accompanying consolidated statements of operations. Under the terms of certain agreements, the Company issued LOCs totaling $29.3 million.

Helix Ironwood, LLC (Ironwood) has a term warranty contract (TWC) with Siemens Energy, Inc. (Siemens) for outage procedures on turbine and generator components, expiring at the earlier of a major inspection or December 31, 2049, with fees based on time and milestones and paid quarterly. The long-term service agreements (LTSA) with GE International (GE) for Armstrong Power, LLC (Armstrong) and Troy Energy, LLC (Troy) expired December 2024. Armstrong has a maintenance service agreement (MSA) with GE that expires in December 2027 and can be renewed on mutual agreement. Troy's MSA with GE expired December 2024. The MSA is a bundled service agreement that involves fixed quarterly fees. Springdale's long-term service agreement with Siemens, expiring by the third major outage or December 31, 2032, includes similar fee structures and potential extensions.

Doswell Limited Partnership (Doswell) and Siemens has an LTSA that provides for outage procedures on certain combustion turbine components. The LTSA term expires on the earlier of the date on which the scheduled 2nd major outage procedures have been completed or September 28, 2030. Doswell pays for these services on a monthly basis based on operating hours multiplied by a contracted rate, subject to escalation, as well as pay periodic fixed milestone payments.

Ravenswood has a contractual services agreement (CSA) with GE for outage procedures on gas combustion turbine components, expiring at the earlier of the fourth major outage or 225,000 operating hours, or October 3, 2036. Initially, Ravenswood makes quarterly payments in arrears based on operating hours at a contracted rate, subject to escalation.

Payments for LTSAs, TWC, and CSA are deferred as prepaid expenses until maintenance occurs, while Armstrong and Troy's payments are expensed quarterly. For the period from August 9, 2024 to December 31, 2024, the Company made payments totaling $11.6 million under the TWC, MSAs, and LTSAs. The Springdale LTSA and Ironwood TWC costs incurred have exceed the cumulative payments made and accordingly the net excess in the amounts of $9.9 million and $12.8 million is reflected as a component of Accounts Payable and accrued expenses and Other long term liabilities, respectively, in the accompanying consolidated balance sheets. Conversely, the Ravenswood CSA and Doswell LTSA payments made have exceeded the cumulative costs and accordingly the net excess in the amounts of $14.2 million is reflected as a component of Other current assets in the accompanying consolidated balance sheet.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

The Company has several agreements to sell capacity to various counterparties. These agreements enable certain Generation Facilities to sell to various counterparties a fixed quantity of capacity at a fixed price for a certain period of time.

The Company has electric interconnection agreements with PJM, ISO -NE, Con Edison, National Grid and other counterparties that connect the Generation Facilities to the electrical power grid. The agreements continue in effect indefinitely until terminated. The Company has gas interconnection agreements with various counterparties that connect the Generation Facilities to their respective natural gas pipelines. The agreements continue in effect indefinitely until terminated. For the period from August 9, 2024 to December 31, 2024, the Company did not incur maintenance costs relating to the electric and gas interconnection agreements.

The Company has various long term contractual and commercial commitments of which the significant contracts have been discussed in this note and note 6, which further discusses lease agreements. The following table summarizes the obligations with respect to the significant contractual and commercial commitments, including lease agreements, as of December 31, 2024 (in thousands):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

The Company has various operating leases for land, storage, and office equipment. These include a lease for 21.2 acres of land from Rock River Valley Industrial Park, Inc. for the Rockford generation facility, which includes easements for operating a simple cycle generation facility. This lease, expiring on December 31, 2039, is payable on an annual basis subject to a 3% escalation. Additionally, the Company leases 8.5 acres from the Town of Wallingford, expiring in January 2040, and holds several land leases for the Riverside generation facility, expiring in 2040 and 2041, with monthly payments subject to escalation.

For office space, the Company entered into a 5-year and 6-year lease on December 30, 2021, which includes a 5-year renewal option. Lease payments are made monthly, and renewal options that are reasonably certain to be exercised are included in the lease term. The Company does not have any leases with variable payments or residual value guarantees.

As of December 31, 2024, annual payments based on the maturities of the Company’s operating leases are expected to be as follows (in thousands):

As of December 31, 2024, annual payments based on the maturities of the Company’s operating leases are expected to be as follows (in thousands):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

On Acquisition Date, the Company assumed existing debt obligations with a principal amount of $2.5 billion as part of the acquisition (See Note 3). The assumed debt consisted of $2.1 billion in variable rate loans with interest rates based on SOFR plus spreads ranging from 2.75% to 4.75%, and $458 million in fixed rate notes with interest rates of 5.64%. In accordance with ASC 805, the variable rate loans were recorded at their carrying value as their carrying value approximated fair value at the Acquisition Date. On Acquisition Date, the fixed rate notes were recorded at their fair value of $441 million.

On August 16, 2024 (Finance Date), the Company established new financing arrangements to facilitate the repayment of the long term debt assumed in the Acquisition (See Note 3), pay transaction costs, pay to partially offset certain commodity derivatives (See Note 11), and make a $513.8 million distribution. The loss on debt extinguishment of $17 million on the fixed rate notes was recognized in Interest expense, net in the accompanying consolidated statement of operations.

Our financing arrangements consisted of the following as of December 31, 2024 (in thousands):

On August 16, 2024, the Company entered into a credit agreement (Credit Agreement) with various lenders. The Credit Agreement consists of a term loan totaling $1.75 billion (Term Loan) and revolving loan facility of $600 million (Revolving Facility). The maturity date of the Term Loan and the Revolving Facility is August 16, 2031, and August 16, 2029, respectively. The interest rate for the Term Loan is equal to the SOFR rate plus a margin of 3.25%. The interest rate in effect at December 31, 2024 for the Term Loan was 7.58%.

Under the terms of the Credit Agreement, principal on the Term Loan is paid quarterly commencing on December 31, 2024, in an amount equal to 0.25% of the original outstanding principal. Each quarter, commencing in December 2025, a percentage, based on the first lien net leverage ratio, of the excess cash flows are applied to repay a portion of the outstanding Term Loan, after such, the Company is permitted, subject to meeting certain distribution conditions, to distribute the remaining excess cash. The Company is required to prepay the Term Loan with 25% of any remaining excess cash flow if the first lien leverage ratio exceeds 3.50 but is less than 4.25, 50% of any remaining excess cash flow if the first lien leverage ratio exceeds 4.25 but is less than 5.50, and 75% of any remaining excess cash flow if the first lien leverage ratio exceeds 5.50. Additionally for each quarter, the Company is required to maintain at least a 1.10 fixed charge coverage ratio.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Under the terms of the Credit Agreement, the Company includes the receipt of revenues, debt service payments and the payments for certain categories of expenses in one bank account. The Company has established the required bank account and has pledged all its rights, title and interest in the bank account as security for its payment obligations under the Credit Agreement.

As of December 31, 2024, there was $1.75 billion outstanding under the Credit Agreement and $60 million and $21 million of LOCs and borrowing, respectively, outstanding under the Revolving Facility.

As of December 31, 2024, the unamortized debt issuance and deferred financing costs totaled $64 million. The amortization of these costs is reflected as a component of Interest expense, net on the accompanying consolidated statement of operations. For the period August 9, 2024 to December 31, 2024, amortization of such costs totaled $3.3 million.

As of December 31, 2024, minimum principal payments for the next five years for the term loans are as follows (in thousands):

On August 16, 2024, the Company entered into an notes indenture with various lenders, which consists of senior secured notes (Secured Notes) totaling $1.5 billion with a maturity date of August 15, 2032. The fixed interest rate on the Secured Notes is 7.25% and is paid semi-annually in arrears on and of each year, commencing on February 15, 2025. The principal amount of the Secured Notes will be paid in full on maturity unless the Company chooses to early redeem.

The Company enters into commodity derivatives to reduce its exposure to market fluctuations of energy prices and gas prices. The Company is a party to the following derivative instruments:

The Company entered into several daily financial heat rate call option contracts with various counterparties. The contracts provided for receipt of fixed option premium payments by the Company, net of energy settlements based on a fixed heat rate, power reference index price, gas reference index price, and certain energy prices. The heat rate call option is marked to market with changes in fair value recognized in current period earnings.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

The Company enters into various energy related derivatives to manage the commodity price risk associated with power revenue and fuel costs for the Generation Facilities, including:

On Finance Date, the Company entered into an agreement with a counterparty to enter into new power and gas swap contracts that had the economic effect of bringing certain existing power and gas swap contracts to an overall net value of zero while maintaining original counterparty arrangements. The Company paid $245.6 million as part of this arrangement, which was recorded as risk management assets and liabilities.

The Power Swap Contracts, Gas Swap Contracts, Capacity Contracts, Option Contracts, Heat Rate Call Option Contracts, and RGGI Contracts are entered into as part of the Company’s overall hedging strategy with respect to commodity price risk associated with energy gross margin. The Company records changes in the fair value of the commodity derivatives in the accompanying consolidated statements of operations in the current period.

The Company’s outstanding net position as of December 31, 2024 is summarized in the following table (in thousands):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Fair Value Measurements

The following table sets forth by level within the fair value hierarchy the assets and liabilities of the Company that were accounted for at fair value on a recurring basis as of December 31, 2024. These assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The three levels of the fair value hierarchy defined by ASC 820 are as follows:

·     Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

·     Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and agreement prices for the underlying instruments, as well as other relevant economic measures. Substantially all these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.

·     Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The following table presents assets and liabilities measured and recorded at fair value on the Company’s consolidated balance sheet and their level within the fair value hierarchy as of December 31, 2024 (in thousands):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

For the period from August 9, 2024 to December 31, 2024, the Company did not have any transfers between Levels 1, 2, or 3.

The following tables provide quantitative information for financial instruments classified as Level 3 in the fair value hierarchy for the period from August 9, 2024 to December 31, 2024:

The following tables present information concerning the impact of derivative instruments on the accompanying consolidated balance sheets and consolidated statements of operations.

Impact of Derivative Instruments on the Accompanying Consolidated Balance Sheets

The following tables present the classifications and fair value of derivative instruments on the accompanying consolidated balance sheets as of December 31, 2024 (in thousands):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

Impact of Derivative Instruments on the Accompanying Consolidated Statements of Operations

The following table presents the classification and amount of the gains and losses on derivative instruments in the accompanying consolidated statements of operations for the period from August 9, 2024 to December 31, 2024.The impact of derivative instruments that have not been designated as hedging instruments (in thousands):

Offsetting of Derivative Assets and Liabilities

The Company has elected to present derivative assets and liabilities on the balance sheets by offsetting amounts that could be netted pursuant to agreements with the Company’s counterparties.

The following tables present the gross and net derivative assets and liabilities and shows the effect if the offsetting amounts were shown net pursuant to agreements with the Company’s counterparties on the accompanying consolidated balance sheet December 31, 2024 (in thousands):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the period from August 9, 2024 to December 31, 2024

The Company receives certain overhead administrative and management services from an affiliate. These costs are not allocated to the Company. For the period from August 9, 2024 to December 31, 2024, the Company made payments of $5.9 million to an affiliate for costs related to the operation and management of the Company, which are reflected under General and administrative in the accompanying statement of operations.

Profits, losses, and distributions are allocated in accordance with the provisions of the Company’s Limited Liability Company agreement. During the period from August 9, 2024 to December 31, 2024, the Company made contributions and distributions in the amount of $9.8 million and $633.7 million, respectively.

The Company enters into contracts in the ordinary course of business that contain various representations, warranties, indemnifications, and guarantees. Some of the agreements contain indemnities that cover the other party’s negligence or limit the other party’s liability with respect to third-party claims, in which event the Company effectively indemnifies the other party. While there is the possibility of a loss related to such representations, warranties, indemnifications, and guarantees in the contracts and such loss could be significant, the Company considers the probability of loss to be remote. The Company, from time to time, is a party to certain other claims arising in the ordinary course of business. The Company is of the opinion that final disposition of these claims will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows.

Notes to Condensed Consolidated Financial Statements

Lightning Power, LLC (the Company), a Delaware limited liability company, was formed on June 21, 2024, to own, finance, develop, and manage a diverse portfolio of power generation facilities across the United States and is wholly owned by Lightning Power Holdings, LLC (Lightning Holdings). Lightning Holdings is directly owned by Fund III Lightning Holdings, LLC (Fund III Holdings) and Gridiron Holdings, LLC (Gridiron Holdings). Fund III Holdings and Gridiron Holdings own 68% and 32%, respectively, Class A common units of Lighting Holdings. Fund III Holdings is indirectly owned, through various holding companies, by Granite Energy, LLC (Granite) and Helix Generation, LLC (Helix). Gridiron Holdings is indirectly owned, through various holding companies, by Gridiron Energy, LLC (Gridiron).

On August 9, 2024, Gridiron, Helix, and Granite contributed 100% ownership interest in their respective generation facilities to the Company. Additionally on the same date, Helix contributed 100% ownership in Rise Light & Power, LLC and subsidiaries (Rise), which was formed to identify, evaluate, and develop investment opportunities within the power industry. The Company was the accounting acquirer in the transaction as it was a substantive entity and obtained controlling financial interests in each of the generation facilities via the contribution of their equity in exchange for the equity of the Company, and the transaction was not among entities under common control.

On May 12, 2025, a definitive purchase and sale agreement was executed with NRG Energy, Inc. for the sale of the Company. The transaction is subject to customary closing conditions and regulatory approvals.

The Generation Facilities that are owned by the Company are described below:

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

The interim condensed consolidated financial statements of Lightning Power, LLC have been prepared by us, without audit, in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted as permitted by such rules and regulations. All normal recurring adjustments have been included, and intercompany transactions have been eliminated in the interim condensed and consolidated financial statements. Management believes the disclosures are adequate to present fairly the financial position, results of operations, and cash flows at the dates and for the periods presented. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2024. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.

These consolidated financial statements and notes reflect the Company’s evaluation of events occurring subsequent to the consolidated balance sheets date through August 15, 2025, the date the consolidated financial statements were issued.

Management makes estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities and reported amounts of revenues and expenses to prepare the condensed consolidated financial statements in conformity with U.S. GAAP. The most significant of these estimates and assumptions relate to derivative instruments and asset retirement obligations. Actual results could differ materially from those estimates.

Restricted cash consists of amounts that are restricted under the terms of certain financing agreements from transfer or dividend until such time as certain conditions are met. Such restricted cash is used primarily for operating expenses and debt service.

As of June 30, 2025, spare parts inventory, natural gas, and fuel oil were $74.6 million, $ 0.2 million, and $51.5 million, respectively. As of December 31, 2024, spare parts inventory, natural gas, and fuel oil were $74.2 million, $ 0.5 million, and $47.8 million, respectively

As of June 30, 2025 and December 31, 2024, the Company had a liability of $71.1 million and $68.5 million respectively, for asset retirement obligations to provide for the future removal and dismantling of certain generation facilities. Accretion expense was $1.3 million and $2.6 million, for the three month and six month periods ended June 30, 2025, respectively.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Property, plant and equipment are stated at cost, less accumulated depreciation. As of June 30, 2025 and December 31, 2024, Property, plant and equipment, net consisted of the following (in thousands):

For the three month and six month periods ended June 30, 2025, depreciation expense for property, plant and equipment was $83.8 million and $167.6 million, respectively.

Other noncurrent assets primarily consists of initial loan contributions that were made by the Company to an unrelated joint venture. The loan contribution accrues interest at 7% per annum. As of June 30, 2025 and December 31, 2024, the Company had a long term debt receivable of $135.9 million. Other noncurrent assets are stated at their carrying values, net of a reserve for doubtful accounts based on evidence of collectability. There were no impairment to Other noncurrent assets as of June 30, 2025 and December 31, 2024

Certain Generation Facilities are located in states that participate in the Regional Greenhouse Gas Initiative (RGGI) to reduce greenhouse gas emissions. As of June 30, 2025 and December 31, 2024, the Company had a RGGI allowance liability of $42.9 million and $23.3 million respectively, which is included in Other current liabilities on the accompanying condensed consolidated balance sheets. For the three month and six month periods ended June 30, 2025, RGGI allowance expense was $10.9 million and $16.7 million respectively, which are reflected as a component of fuel and transportation expense in the accompanying condensed consolidated statements of operations.

Capacity revenue is recognized over time as the Company satisfies its performance obligation of maintaining available generation capacity at negotiated contract terms. Energy revenue consists of physical and financial transactions and is recognized when the performance obligation is satisfied upon delivery of electricity to customers. Physical transactions are recorded on a gross basis in accordance with ASC 606, Revenue from Contracts with Customers, as the Company controls the specified electricity before transfer to customers. The Company has elected to apply the practical expedient to recognize revenue in the amount it has the right to invoice for both capacity and energy revenue, as this represents the value transferred to customers. For the three month and six month periods ended June 30, 2025 capacity revenue amounted to $134.2 million and $ 214.0 million respectively, which is reflected as a component of Energy and capacity revenues in the accompanying condensed consolidated statements of operations.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company) 

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the three month and six month periods ended June 30, 2025, the Company incurred costs under the Energy Management Agreements (EMAs) of $1.0 million and $1.9 million respectively, which is recorded in General and administrative expense on the accompanying condensed consolidated statement of operations. The characteristics and details of the EMAs remain consistent with those disclosed in the annual financial statements for the year ended December 31, 2024, with no material updates during the interim period.

For the three month and six month periods ended June 30, 2025, the Company incurred costs under the O&M agreements of $17.9 million and $37.4 million respectively, which is recorded in Operating and maintenance expense in the accompanying condensed consolidated statement of operations. The characteristics and details of these agreements remain consistent with those disclosed in the annual financial statements for the year ended December 31, 2024, with no material updates during the interim period.

For the three month and six month periods ended June 30, 2025, the Company incurred costs under the asset management and fuel supply agreements of $117.4 million and $367.3 million respectively, which is recorded in Fuel and transportation expense in the accompanying condensed consolidated statements of operations. The characteristics and details of these agreements remain consistent with those disclosed in the annual financial statements for the year ended December 31, 2024, with no material updates during the interim period.

Certain generation facilities have firm gas transportation and storage agreements with various counterparties. These agreements call for the counterparties to deliver natural gas, not to exceed the daily maximum, to a specific interconnection point, specified in the respective agreements.

For the three month and six month periods ended June 30, 2025, the Company incurred costs under the gas transportation agreements of $14.3 million and $29.7 million respectively, which is recorded in Fuel and transportation expense in the accompanying condensed consolidated statements of operations. The characteristics and details of these agreements remain consistent with those disclosed in the annual financial statements for the year ended December 31, 2024, with no material updates during the interim period.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Certain generation facilities have long term maintenance contracts with several counterparties. Based on the terms of such agreements, payments will either be deferred as prepaid expenses until maintenance occurs or expensed quarterly. For the three month and six month periods ended June 30, 2025, the Company made payments totaling $9.5 million and $18.2 million, respectively, under the such agreements. As of June 30, 2025, the costs incurred on certain generation facilities have exceed the cumulative payments made and accordingly the net excess in the amounts of $10.2 million and $9.3 million, respectively, is reflected as a component of Accounts Payable and accrued expenses and Other long term liabilities, respectively, in the accompanying condensed consolidated balance sheets. Conversely, as of June 30, 2025, payments made by certain generation facilities have exceeded the cumulative costs and accordingly the net excess in the amounts of $20.7 million is reflected as a component of Other current assets in the accompanying condensed consolidated balance sheets.

The Company has several agreements to sell capacity to various counterparties. These agreements enable certain Generation Facilities to sell to various counterparties a fixed quantity of capacity at a fixed price for a certain period of time.

The Company has electric interconnection agreements with several counterparties that connect the Generation Facilities to the electrical power grid. The agreements continue in effect indefinitely until terminated. The Company has gas interconnection agreements with various counterparties that connect Generation Facilities to their respective natural gas pipelines. The agreements continue in effect indefinitely until terminated. For the three month and six month periods ended June 30, 2025, the Company did not incur maintenance costs relating to the electric and gas interconnection agreements.

Our financing arrangements consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

On August 16, 2024, the Company entered into a credit agreement (Credit Agreement) with various lenders. The Credit Agreement consists of a term loan totaling $1.75 billion (Term Loan) and revolving loan facility of $600 million (Revolving Facility). The maturity date of the Term Loan and the Revolving Facility is August 16, 2031, and August 16, 2029, respectively. The interest rate for the Term Loan is equal to the SOFR rate plus a margin of 3.25%. The interest rate in effect at June 30, 2025 and December 31, 2024 for the Term Loan was 6.55% and 7.58%, respectively.

As of June 30, 2025 and December 31, 2024, there was $1.74 billion and $1.75 billion respectively, outstanding under the Credit Agreement, respectively. As of June 30, 2025, there was $54.6 million and $42.5 million of LOCs and borrowing, respectively, outstanding under the Revolving Facility. As of December 31, 2024, there was $60.0 million and $21.0 million of LOCs and borrowing, respectively, outstanding under the Revolving Facility.

As of June 30, 2025, the unamortized debt issuance and deferred financing costs totaled $59.5 million of which the current portion was $9.1 million. As of December 31, 2024, the unamortized debt issuance and deferred financing costs totaled $64.0 million of which the current portion was $9.0 million The amortization of these costs is reflected as a component of Interest expense, net on the accompanying condensed consolidated statement of operations. For the three month and six month periods ended June 30, 2025, amortization of such costs totaled $2.3 million and $4.5 million, respectively.

On August 16, 2024, the Company entered into a notes indenture with various lenders, which consists of senior secured notes (Secured Notes) totaling $1.5 billion with a maturity date of August 15, 2032. The fixed interest rate on the Secured Notes is 7.25% and is paid semi-annually in arrears on and of each year, commencing on February 15, 2025. The principal amount of the Secured Notes will be paid in full on maturity unless the Company chooses to early redeem.

The Company enters into commodity derivatives to reduce its exposure to market fluctuations of energy prices and gas prices. The Company is a party to the following derivative instruments:

The Company has heat rate call option contracts with various counterparties. The contracts provided for receipt of fixed option premium payments by the Company, net of energy settlements based on a fixed heat rate, power reference index price, gas reference index price, and certain energy prices. The heat rate call option is marked to market with changes in fair value recognized in current period earnings.

The Company enters into various energy related derivatives to manage the commodity price risk associated with power revenue and fuel costs for the Generation Facilities, including:

a) Power Swap Contracts, which require payments to or from counterparties based upon the difference between the contract and the market price for a predetermined notional amount. These contracts are used to manage commodity price risk associated with changes in the ISOs power prices.

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

b) Gas Swap Contracts, which require payments to or from counterparties based upon the difference between the contract and the market price for a predetermined notional amount. These contracts are used to manage commodity price risk at multiple delivery points associated with changes in fuel prices.

c) Capacity Contracts, which require payments from counterparties based upon the difference between the contract and the market price for a predetermined notional amount.

d) Option Contracts, which provide the Company the ability to buy or sell power at a fixed price.

e) RGGI Contracts, which two parties agree to exchange a fixed number of allowances of a certain vintage year at a fixed price for a specific delivery month.

The Power Swap Contracts, Gas Swap Contracts, Capacity Contracts, Option Contracts, Heat Rate Call Option Contracts, and RGGI Contracts are entered into as part of the Company’s overall hedging strategy with respect to commodity price risk associated with energy gross margin. The Company records changes in the fair value of the commodity derivatives in the accompanying condensed consolidated statements of operations in the current period.

Fair Value Measurements

The following table sets forth by level within the fair value hierarchy the assets and liabilities of the Company that were accounted for at fair value on a recurring basis as of June 30, 2025. These assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The three levels of the fair value hierarchy defined by ASC 820 are as follows:

· Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

· Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and agreement prices for the underlying instruments, as well as other relevant economic measures. Substantially all these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.

· Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The following table presents assets and liabilities measured and recorded at fair value on the Company’s condensed consolidated balance sheet and their level within the fair value hierarchy as of December 31, 2024 (in thousands):

The following tables provide quantitative information for financial instruments classified as Level 3 in the fair value hierarchy for the period ended June 30, 2025:

The following tables provide quantitative information for financial instruments classified as Level 3 in the fair value hierarchy for the period ended December 31, 2024:

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

The following tables present information concerning the impact of derivative instruments on the accompanying condensed consolidated balance sheets and condensed consolidated statements of operations.

Impact of Derivative Instruments on the Accompanying Condensed Consolidated Balance Sheets

The following tables present the classifications and fair value of derivative instruments on the accompanying condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024 (in thousands):

Impact of Derivative Instruments on the Accompanying Condensed Consolidated Statements of Operations

The following table presents the classification and amount of the gains and losses on derivative instruments in the accompanying condensed consolidated statements of operations for the period ended June 30, 2025. The impact of derivative instruments that have not been designated as hedging instruments (in thousands):

LIGHTNING POWER, LLC

(A Delaware Limited Liability Company)

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

Offsetting of Derivative Assets and Liabilities

The Company has elected to present derivative assets and liabilities on the balance sheets by offsetting amounts that could be netted pursuant to agreements with the Company’s counterparties.

The following tables present the gross and net derivative assets and liabilities and shows the effect if the offsetting amounts were shown net pursuant to agreements with the Company’s counterparties on the accompanying condensed consolidated balance sheet as of June 30, 2025 (in thousands):

The following tables present the gross and net derivative assets and liabilities and shows the effect if the offsetting amounts were shown net pursuant to agreements with the Company’s counterparties on the accompanying condensed consolidated balance sheet as of December 31, 2024 (in thousands):

The Company receives certain overhead administrative and management services from an affiliate. A portion of such costs related to these services are allocated to the Company and reimbursed by the Company. All other costs related to the operation and management of the Company are reflected in the accompanying consolidated statements of operations.

Profits, losses, and distributions are allocated in accordance with the provisions of the Company’s Limited Liability Company agreement. For the six months ended June 30, 2025, the Company made distributions in the amounts of $103.2 million.

The Company enters into contracts in the ordinary course of business that contain various representations, warranties, indemnifications, and guarantees. Some of the agreements contain indemnities that cover the other party’s negligence or limit the other party’s liability with respect to third-party claims, in which event the Company effectively indemnifies the other party. While there is the possibility of a loss related to such representations, warranties, indemnifications, and guarantees in the contracts and such loss could be significant, the Company considers the probability of loss to be remote. The Company, from time to time, is a party to certain other claims arising in the ordinary course of business. The Company is of the opinion that final disposition of these claims will not have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or cash flows.