Alberto Fornaro
Executive Vice President and Chief Financial Officer at NRG Energy
Thank you, Mauricio. Moving to the quarterly results. I will now turn to Slide seven for a brief review of our financials. For the quarter, NRG delivered $767 million in adjusted EBITDA, or $15 million higher than the third quarter of last year. The increase in consolidated earnings was driven by the acquisition of Direct Energy and the related additional synergies achieved in Q3, partially offset by the impact of the outage at our Limestone Unit one facility and other headwinds related to the onset of supply chain constraints.
Specifically, by region, the East benefited by $89 million, driven by the expected contribution from the Direct Energy acquisition and some incremental synergies and cost savings. This benefit was partially offset by reduced volume in our sale of power as well as lower profitability from our PJM core fleet due to supply chain constraints for chemical necessary to run the environmental controls.
Next, our Texas region decreased by $68 million due to the higher supplier cost to serve our retail load. With the outage of Limestone Unit one, we had to purchase higher price supply to supplement this lost generation. This increase in supply cost was partially offset by the contribution from the Direct Energy acquisition. As a reminder, we benefited the last year from exceptionally low market power prices realized during the COVID-driven economic shutdown and a favorable mix in usage between home and business customers.
The free cash flow before growth in the quarter was $395 million, a reduction of $230 million year-over-year, driven primarily by two factors, a $75 million increase in cash interest due to the $3 billion in Direct Energy financing in late 2020 and second is the movement in inventory. During Q3 2020, we reduced inventory by $60 million, driven by seasonal trends and coal utilization. While during Q3 2021, we built up inventories by $75 million, mostly for the seasonal needs of the gas business. This overall resulted in a $135 million negative cash flow balance.
On a year-to-date basis, our progress in terms of incremental profitability is significant and driven by the acquisition of Direct Energy. Our expectation for the net impact from Winter Storm Uri remains at $500 million to $700 million with a $10 million increase in onetime costs, offset by a similar increase in the range of expected mitigants now that positive development and the Texas legislator have increased the probability of recouping some of our Uri losses. The total negative cash impact has shifted slightly as the estimated bill credits owed to large commercial and industrial customers have been reduced by higher billings in 2021. As a consequence, the 2021 Uri negative cash impact has increased by $85 million with a corresponding movement in 2022. We expect to receive the majority of the securitization proceeds during the first quarter of 2022 with a possible first tranche later this year.
Now turning to the Direct Energy integration. We are confirming our goal to achieve a run rate of $300 million synergies by 2023. During 2021, we have identified further areas for cost synergies, and we're able to realize certain synergies earlier than anticipated. Overall, we are on track to achieve $175 million of synergy for 2021, with $144 million realized year-to-date. Synergy expectation, as well as onetime cost savings, achieved so far are fully embedded, respectively, in our 2021 guidance and year-to-date actuals.
As you are all familiar, supply chain constraints are affecting many industry across the country, and they are affecting our operation as well. In addition to our Limestone Unit one outage, which is now extended to mid-April 2022, constraint in the availability of coal are impacting both costs and volumes. In addition, our Midwest Generation coal plants are impacted by a shortfall in necessary chemicals to run the environmental controls of the fleet. Due to these constraints, we are now narrowing our guidance to the lower end of our original guidance to $2.4 billion to $2.5 billion. We are currently near the bottom of this range, but we are working intensely to improve our results.
Consequently, we have also narrowed our free cash flow before growth guidance to $1.44 billion to $1.54 billion. Moving to Slide eight. We are initiating guidance for 2022 to $1.95 billion to $2.25 billion. This is a significant decrease from our current 2021 results, driven by three elements as laid out on this slide, planned divestiture of East and West power plants and the activation of our Midwest Generation, already highlighted in the Investor Day, the reduction in the New York City capacity revenues and the impact from the transitory costs that are related to 2022 only.
As mentioned above, the contribution from Direct Energy would increase in 2022 by $130 million, driven by the anticipated increase in synergies. We have already realized more synergy benefits in 2021, accelerating some action, and therefore, we believe that we can achieve our target for 2022 of $225 million.
Next, we anticipate the sale of our East and West assets to close next month for a net of $620 million in sales proceeds, reducing EBITDA by $100 million going forward. With the retirement of our coal assets in the East in mid-2022, EBITDA will decrease by $90 million in the year. In addition, due to change in New York capacity market parameters, capacity prices have decreased on a more permanent basis, affecting our Astoria and Arthur Kill facilities, and reducing EBITDA by a further $30 million.
As mentioned above, we are experiencing a one-time extended forced outage at our Limestone Unit one facility and what we believe to be transitory supply chain constraints that are negatively impacting 2022 results. And we expect to correct them in 2023. With increased power prices, the extended outage at our Limestone facility is increasing our supply cost by $50 million to April 2022. With the advent of constraints on coal and chemical deliveries and commodity price, we expect fuel and supply cost to increase by $100 million in 2022 while returning to normal levels in future years.
Lastly, with the change in the ERCOT market, we are expecting an increase in ancillary charges that were initiated after we contracted the customers and were not included in our margin price. In the future, these costs will be included in future contract prices. But during 2022, we will incur an incremental $70 million of ancillary costs. This outcome is negative to us, and our management team is working tireless to mitigate these incremental costs as best as possible, including further one-time cost savings opportunity.
Given increased volatility in this environment, we are also increasing the range of our guidance with the expectation that we can identify enough mitigants in 2022 to offset the portion for these costs. The reduction in EBITDA is the primary driver for the lower free cash flow before growth.
I will now turn to Slide nine, where we are updating our plan 2021 capital allocation. As in the past, our practice on this slide is to highlight changes from last quarter in blue. Starting from the left-most column, we have updated the 2021 excess cash with the latest free cash flow midpoint to $1.49 billion, reducing available cash by $50 million.
Moving to the Winter Storm Uri, and as discussed before, the midpoint for the net estimated cash impact for Winter Storm Uri remains at $600 million. But given the increased utilization of customer credit in 2021, the net cash impact after assumed mitigants has increased to $535 million in 2021 and decreased by the same amount in 2022 to only $65 million. As you are aware, the much-anticipated securitization builds HB4492 and SB1580 have been approved and the regulation has been finalized by ERCOT and the PUCT. We anticipate that the main portion of the financing and release of funds will occur during the first quarter of 2022.
Moving to the next column, to pursue our targeted net debt-to-adjusted EBITDA ratio, we completed the delivering of $250 million, plus early redemption fees of $64 million in Q3, totaling $319 million. Finally, we have added the anticipated sale of 4.8 gigawatts of generation in the East and West regions. The net cash proceeds of $620 million will be utilized partly for debt reduction, $500 million to maintain leverage neutrality. After incremental fees of $16 million, the remaining $104 million will be available for general capital allocation. This leaves $375 million of remaining capital for allocation, and this capital is dependent on the successful conclusion of the securitization process.
Finally, on Slide 10, after reducing our corporate debt balance for 2021, debt delevering and for the minimum cash, our 2021 net debt balance will be approximately $7.9 billion, which, when based at the midpoint of adjusted EBITDA, implies a ratio slightly above three times net debt to adjusted EBITDA.
As discussed during Investor Day, given our growth profile, our goal is to achieve investment-grade metrics of 2.5 to 2.75 times net debt-to-adjusted EBITDA ratio. We remain committed to a strong balance sheet and continue to target the 2.5 to 2.75 ratio, primarily through the full realization of Direct Energy run-rate earnings.
Back to you, Mauricio.
