Mauricio Gutierrez
President and Chief Executive Officer at NRG Energy
Thank you, Kevin. Good morning, everyone, and thank you for your interest in NRG. I'm joined this morning by Alberto Fornaro, Chief Financial Officer. Also on the call and available for questions, we have at least have Elizabeth Killinger, Head of Home; Rob Gaudette, Head of Business and Market Operations; and Chris Moser, Head of Competitive Markets and Policy.
I'd like to start with the three key messages for today's presentation on Slide 4. We are narrowing our 2022 EBITDA guidance to the bottom end of the range as we indicated on our last earnings call, and we are initiating 2023 financial guidance, in-line with our Investor Day plan. We continue to make good progress on our strategic priorities and have now completed the initial phase of our test and learn program. The insights that we have gained from this process will inform our next phase of growing from our core energy business into adjacent essential home services. Finally, as I committed to you, we are announcing our 2023 capital allocation plan, which includes an incremental $600 million share repurchase program consistent with our long-term capital allocation principles. Our business performed well during the third quarter, which was characterized by extreme price volatility and record load in our key Texas market. I am very proud of our team, which once again achieved another quarter of top decile safety performance despite these challenging market conditions.
As you can see on Slide 5, we delivered $452 million of adjusted EBITDA. Entirety of the change compared to last year was previously identified with 60% coming from asset sales and transitory impact and 40% from the unplanned outage at our W.A. Parish facility. With these results, we are narrowing our 2022 EBITDA guidance to the bottom end of the range. Alberto will provide additional details in his section.
We also made good progress on all our key strategic priorities. We have now achieved our Direct Energy synergy target for 2022 and remain on track to achieve the full run rate of $300 million by next year. We continue to optimize our generation portfolio by retiring uneconomic fossil fuel plants, monetizing non-core assets, and partnering for brownfield development. As part of this effort, we are selling the Astoria site for approximately $200 million in net cash proceeds.
On our growth program, we continue to focus on cross-selling power and gas to our existing customer network. And with respect to our test and learn program, we have gained significant insights and are ready to start executing on our plan. I will discuss in greater detail later in the presentation. We also have made good progress on our $1 billion share repurchase program for 2022, with $603 million completed to date and $397 million yet to be completed. Finally, today we're introducing 2023 financial guidance of $2.27 million to $2.47 billion of adjusted EBITDA and $1.52 million to $1.72 billion of free cash flow before growth, in-line with our Investor Day outlook.
As I mentioned to you, weather conditions in Texas were extremely this past summer with ERCOT surpassing the old peak demand record 39 times, driven by record heat in the early part of the summer and a strong Texas economy. As, you can see on the bottom left of the Slide 6, power price expectations, which are shown in the light-blue bars, were as wide as I have ever seen them. This volatility was the result of record low, coupled with uncertainty around production from non dispatchable renewable generation. Importantly. It took record sustained heat, coupled with low renewable production to materialize into the high real time power prices we experienced in May and July. It is worth pointing out that even during this scarcity periods, we never triggered on emergency events, not even once. This is a testament that the Texas grid is strong and working as intended, with enough capacity to meet current and future demand.
Turning to the right-hand side of the slide, we continue to see strong demand from our customers with no notable increase in bad debt levels. Retention has also remained strong, driven in part by our unmatched insights to pricing and customer preference, which enables us to navigate periods of high-price and high volatility. We have also been successful in extending the average term of a new Texas customer contract to two years. This extension is good for both our customers and our shareholders, giving that stability and predictability to customer bills and our earnings.
On the supply side, our generation portfolio performed well during the summer, while the team managed the impact of the W.A. Parish unit 8 outage. We were able to expand our maintenance program ahead of the summer, which resulted in better operational performance. Looking ahead, and as I discussed in our last call, we will increase maintenance capital in our plants given higher power prices.
Now, I'd like to spend some time talking about our ongoing efforts in moving closer to the customer. We introduced the diagram on Slide 7 during our Investor Day to capture our vision of the smart home. As you can see from the table on the right, we have made substantial progress in laying the foundation to execute on our vision to become the leading provider of essential services at home. During the year, we evaluated over a dozen adjacent offerings and engaged in multiple partnership pilots for EVs, from solar another home services. By starting small, it allowed us to stay nimble, while gathering critical market intelligence to inform how we approach these new customer offerings. The result of these programs helped validate our assumptions and provides confidence in how to execute our customer-centric strategy.
Now, let me put a finer point on our key findings on Slide 8. First, the Internet of things is here and is enabling the smart home opportunity. People are connecting new devices every day, with an average of 25 devices per home. This number has more than doubled since 2019, and continues to grow rapidly, resulting in multiple interfaces that don't necessarily interact with each other. Customers want simple, connected and customized experiences. It is clear that a single interface for the home is of increasing importance and customer attitudes around these services are shifting from nice to have, to need to have.
Next, the electrification of the economy through smart technology and clean energy choices is real. We are seeing an increasing number of devices and appliances connected, like HVAC, water heaters, battery, rooftop solar and other, in addition to having greater penetration of electric vehicles. Finally, customers are demanding access to cleaner, affordable and more resilient solutions. This is in part driven by a desire to be a part of a more sustainable future, reinforced by a need for resiliency in the face of more extreme weather. And importantly, this has been accelerated by advancements in technology and policy.
With this integrated ecosystem at home, there is a significant value opportunity as you can see on the right hand side of the slide. For NRG, we can offer adjacent products and services that leverages our existing energy operating platform, allowing us to access cost savings and provide superior customer experience. This advantage means broader insights into how customers interact with their homes, which translates into additional margin opportunities and increase brand loyalty.
Now turning to Slide 9. In 2023, we will increase efforts to grow our bundled essential products and services through a mix of existing offerings, strategic partnerships and vertical integration. All of them aimed at making NRG the leading provider of essential services at home. We are also providing our capital allocation plan for 2023, which is in line with our long-term capital allocation principles. Our plan is to return 50% of our capital available for allocation to our shareholders with an incremental $600 million share repurchase program and an 8% increase in our annual dividend. For the remaining 50%, we're allocating $331 million to identify growth investments and reserving $620 million to be deployed throughout the year to the highest return opportunity between growth and share repurchases.
So with that, I will pass it over to Alberto for the financial review.
