Fred and Nick get into a huge snowball fight - ending up with Nick putting his back out, and Fred storming off home. Nick is overcome with feelings of guilt and joins a Brothers Anonymous Group where he is sat next to Stephen Baldwin, and the brothers of Bill Clinton and Sylvester Stallone. The Clinton brother's speech really gets to him, and Fred decides to head back to the North Pole to help out.
Meanwhile Clyde (Spacey) has given Santa his Third Strike when he shows surveillance footage of Fred stamping each kid's record with the 'Nice' Stamp. Fred arrives at the workshop and tells them to roll out the quickest toys to make -- baseball bats and hula hoops. He gets in the sleigh with Willie and gets to work. He is against the clock to make it around the workd and get back before sunrise, but the Elves at Mission Control lend a hand.
Suddenly ... Clyde pulls the plug and the power is out. Fred and Willie are flying blind.
Nick approaches Clyde, and remembers his wish as a boy. Clyde was on the naughty list, but just because he was bullied. Nick realises that his brother was right all along and every kid deserves a chance, while he gives Clyde the Superman cape he asked for. Clyde is full of remorse, but they cannot turn on the power again.
Everyone waits nervously ... until just before sunrise Fred and Willie return. Willie walks up to Charlene, grabs a stool, and kisses her.
Fred returns home, and makes amends with his girlfriend by giving her a present and promising to take her to Paris.
As it ends we see that Clyde was hired by Santa as a consultant to help the Elves with their timekeeping and paperwork, while the whole family meets for dinner and they can finally enjoy each other's company.