First Quarter 2004 Financial Results

1
First Quarter 2004 Financial Results

• May 11, 2004

2
Safe Harbor Statement
This Investor Presentation contains
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of
1934. Forward-looking statements are subject to
certain risks, uncertainties and assumptions and
typically can be identified by the use of words
such as expect, estimate, anticipate,
forecast, plan, believe and similar terms.
Such forward-looking statements include, but are
not limited to, expected earnings, future growth
and financial performance, timing of debt
maturities, resolution of litigation and
bankruptcy claims, the hiring of new independent
auditors, the successful closing of announced
transactions, the successful implementation of
our acquisition and repowering strategy, the
outcome of hearings on our RMR agreements and
cost tracker for scheduled expenses, and FERCs
approval of the basic LICAP market design .
Although NRG believes that its expectations are
reasonable, it can give no assurance that these
expectations will prove to have been correct, and
actual results may vary materially. Factors that
could cause actual results to differ materially
from those contemplated above include, among
others, general economic conditions, hazards
customary in the power industry, competition in
wholesale power markets, the volatility of energy
and fuel prices, failure of customers to perform
under contracts, changes in the wholesale power
markets and related government regulation, the
condition of capital markets generally, our
ability to access capital markets, our
substantial indebtedness and the possibility that
we may incur additional indebtedness, adverse
results in current and future litigation, delays
in hiring new independent auditors, delays in or
failure to meet closing conditions in announced
transactions, failure to identify or successfully
implement acquisitions and repowerings, adverse
rulings on our RMR agreements and cost tracker
for scheduled expenses, resulting in us refunding
certain payments received to date, and FERC not
approving the basic LICAP market design. NRG
undertakes no obligation to update or revise any
forward-looking statements, whether as a result
of new information, future events or otherwise.
The foregoing review of factors that could cause
NRGs actual results to differ materially from
those contemplated in the forward-looking
statements included in this Investor Presentation
should be considered in connection with
information regarding risks and uncertainties
that may affect NRG's future results included in
NRG's filings with the Securities and Exchange
Commission at www.sec.gov.
3
Agenda

• Progress Year-to-Date
• Q1 Financial Results
• Strategy

4
Highlights

• Strong first quarter operating performance
• 266 million in adjusted EBITDA
• 316 million in Free Cash Flow
• Liquidity continues to strengthen 1.4 billion
  at end of Q1
• Post-Chapter 11 emergence plan solidly on track
• Internal reorganization proceeding in accordance
  with plan

5
The First 100 Days Objectives
Financial Priorities
1. Simplify capital structure
2. Ensure our liquidity
3. Reduce borrowing costs
Operational Priorities
1. Keep plants running safely, reliably and
efficiently
2. Increase contracted portion of merchant
generation
3. Maintain momentum in asset sale program
4. Resolve commercial issues with Connecticut
plants
Organizational Priorities
1. New CFO
2. Expedited phase-out of external advisers
3. Redirected management team
4. Restructured corporate organization
6
Operational Performance - Core Regions
Net ownedcapacityMW
In-marketavailability
Net capacityfactor
Average heatrate(Btu / kWh)
Equivalentavailability
Generation(MWh)
Region
7,884
11,400
95
38
81
2.9 million
Northeast
2,469
10,700
98
57
85
2.8 million
South Central
1,321
11,600
99
18
72
0.9 million
West

• Our plants in the Northeast dealt successfully
  with periods of unusually cold weather
• Our fuel diverse fleet of generators in New York
  and Connecticut, helped maintain affordable
  electric prices during gas price spikes
• The Western Region successfully completed
  thirteen planned outages at seven different plants

7
Operational 2004 Hedging Activity
GigaWatt hours
10,000
In the moneyGeneration (1)
8,000
Energy Sales (2)
6,000
Fuel Hedges (3)
4,000
2,000
0
Entergy
New York
PJM
Nepool
For the balance of 2004, the Company has hedged
48 of In the money generation with forward
energy commitments and has locked in the energy
margin from those sales by purchasing 80 of the
forward fuel requirements
(1) In the money generation is derived by
multiplying the forward positive spark spread (on
an hourly basis) by the available capacity of
each unit and aggregating by region (2) Energy
sales are actual monthly forward sales, including
load serving contract commitments (3) Fuel Hedges
are actual fuel purchases converted, according to
each plants heat rate, to an equivalent amount
of generation (MWh)
8
Asset Sales - 2004

• We continue to make progress rationalizing the
  Companys non-core assets for value

Actual or expected cash proceeds (Millions)
Balance Sheet Debt (Millions)
Name
Location
Status
Calpine Cogen
Various, U.S.
3
N/A
Completed
PERC
Maine
17
25
Completed
Loy Yang A
Australia
27
N/A
Completed
Cobee
Bolivia
50
24
Completed
Batesville
Mississippi
27
292
Executed PSA
Various
20
45
Others (4)
Executed PSAs
TOTAL
144
386
9
Connecticut Status

• RMR Agreements
• FERC has approved, subject to hearing and refund,
  NRGs RMR agreements for Middletown, Montville
  and Devon units 11-14 (1,392 MW in total)
• These RMR agreements will remain in effect until
  the LICAP market is implemented
• FERC has also approved, subject to hearing and
  refund, NRGs Cost Tracker for scheduled expenses
  incurred until LICAP implementation
• The RMR Agreements, together with the Cost
  Tracker, will cover NRGs cost of service for
  Middletown, Montville and Devon 11-14 until the
  LICAP market is implemented
• FERC had previously approved, subject to hearing
  and refund, an RMR Agreement for Devon 7 8
  although ISO-NE recently notified NRG that one
  unit is not needed for reliability after April
  2004 - as a result, NRG plans to retire Unit 8 in
  May.
• Locational Installed Capacity (LICAP) market
• Proposed LICAP market in New England that would
  pay Norwalk, Connecticut Jet Power, Middletown,
  Montville and Devon 11-14 (1,812 MW in total)
  5.34 per kW-month
• Should provide a positive cash flow for the
  Connecticut fleet as a whole
• FERC is expected to approve the basic LICAP
  market design sometime this summer

These RMR agreements are expected to contribute
up to 30 million of revenue per quarter
10
Current Objectives Checklist
Financial Priorities
2.7 billion refinanced two-tier security
structure withweighted average cost of 6.8
(revolver undrawn)
1. Simplify capital structure
Liquidity of nearly 1.4 billion
2. Ensure our liquidity
3. Reduce borrowing costs
Corporate debt maturities of less than 53
million due over next six years
Operational Priorities
1. Keep plants running safely, reliablyand
efficiently
96 IMA from coal-fired fleet, safety record
better than industry standard
2. Increase contracted portion ofmerchant
generation
High percentage of coal requirements contracted
andsubstantial portion of economic energy
production sold forward
3. Maintain momentum in assetsale program
146 million in asset dispositions as of May 7,
2004 completed- 97 million in cash, 49 million
in debt reduction
4. Resolve commercial issues with Connecticut
plants
RMR agreements approved by FERC. LICAP expected
summer or fall 2004
Organizational Priorities
1. New CFO
Bob Flexon appointed as CFO
2. Expedited phase-out ofexternal advisers
Bankruptcy legal/financial advisers role
severelycurtailed positive 1Q 04 cash flow
impact
3. Redirected management team
Corporate restructuring with regional emphasis
Streamlined HQ to be relocated in core region
4. Restructured corporate organization
11

• Financial Results

12
First Quarter Financial Highlights

• Strong financial operating performance
• Reported net income of 30 million or 0.30 per
  share
• Net income of 34 million or 0.34 per share
  excluding non-recurring items
• Improved liquidity
• Net cash flow of 280 million
• Liquidity increased by 188 million over last
  quarter
• Strengthened financial position
• Refinanced 503 million of senior credit facility
• Executed interest rate swaps lowering interest
  expense by 20 million over the next two years

13
Key Financial Highlights
millions

• Operating revenues 621
• Operating income 125
• Net income 30
• EBITDA 259
• Adjusted EBITDA 266

14
1st Quarter 2004 Spark Spreads -North America

• Dark Gas Dual
  Fuel/Oil
• Spread1,2 Spread
  Spread
• Spark Spread 99,813 1,507
  31,013
• (000s)
• /MWh 31.23 10.44
  39.15

1 Dark spread is the spread between energy prices
and coal-fired generation costs 2 Does not
include LaGen
15
North American Generation by Fuel
Fuel Cost/MWh
Fuel Cost Q104 (000)
Fuel Cost03 (000)
Fuel Cost/MWh
MWh Q1 04
MWh 03
Fuel
16.51
91,734
5,554,714
328,303
15.65
20,971,991
Coal
51.50
70,689
1,372,617
259,725
47.41
5,478,208
Gas
58.34
46,302
793,684
106,038
59.86
1,771,370
Oil
208,725
7,721,015
694,066
28,221,569
Total
Gas and Oil MWh are estimated since certain
assets are dual fuel
16
EBITDA by Operating Segment

• ( millions) EBITDA Adj Adj
  EBITDA
• Northeast 114.5 0.3 114.8
• South Central 29.0 0.7 29.7
• West Coast 33.4 0.0 33.4
• Other NA 20.7 (0.4) 20.3
• International 55.1 (0.1) 55.0
• Alt. Energy Services 16.3 0.7
  17.0
• Corp Unallocated (10.0) 5.5
  (4.5)
• Total 259.0 6.7 265.7

17
First Quarter Cash Flow
millions

• Adjusted EBITDA 266
• Interest Payments (43)
• Income Tax Payments (3)
• Other funds used by operations (20)
• FFO 200
• Other working capital changes 25
• Xcel settlement, net 125
• CFO 350
• Asset Sales 3
• CapEx (35)
• Other Cash Used by Investing (2)
• FCF 316
• Cash Used by Financing (38)
• Other sources of cash 2
• Net Cash Flow 280

18
2004 Sensitivity Analysis
Results in the following change to2004 pre-tax
income
Factor Increased by
Factors
39.0 million
1.00/mmbtu
Natural Gas
(0.2) million
1.00/ton
Coal
(1.4) million
1.00/bbl
Oil
(8.4) million
100 bps
Interest rates
Pricing as of 3/31/04, assuming current hedged
positions
19
Liquidity
03/31/04 12/31/03 Unrestricted Domestic
Unrestricted Cash 665 418 International
Unrestricted Cash 168 134 Restricted
Cash Domestic 123 111 International
52 46 Total Cash 1,008 709 Letter of
Credit Availability 137 248 Revolver
Availability 250 250 Total Current
Liquidity 1,395 1,207
millions
20
Credit/Collateral
millions

• March 31,
  2004
• Use of 250 million LC facility
• Xcel Energy (Resource Recovery) 33
• Bank of New York (Peaker facility) 36
• PMI support 44
• Total
  113
• Uses of Collateral supporting PMI
• Letters of Credit 49
• Guarantees 56
• Prepays/Deposits 28
• Margin 24
• Total 157
• Includes 5 million posted under separate LC
  facility

21
Near-Term Corporate Debt Maturities
millions
20
15
10
5
0
2004
2005
2006
2007
2008
2009
Less than 53 million in corporate debt
maturities in aggregate over remainder of decade
22
Other Items

• Independent Auditors
• Staff Appointment
• Controller
• Chief Risk Officer
• Director Internal Audit
• Director Planning and Analysis
• Treasurer

23
Conclusions

• Strong financial results, cash flow and liquidity
• Improving our reporting to enhance understanding
  of results
• Building the team

24

• Strategy
• Beyond Back to Basics

25
Corporate Strategy Industry Perspective

• Each wholesale power generation company
  represents a different commodity risk proposition
  but their overall strategies have stayed in
  lockstep with each other

1998
1999
2003
2004
1997
2001
2000
2002
IPP Industry Strategies
MPoM
MPoM
BtB
BtB
BtB
MPoM
MPoM
MPoM
Asset-light
Trading
26
NRG Back to Basics

• Our Back to Basics strategy is in full swing and
  visible progress is being made
• Reduced corporate burden 33 reduction in
  corporate headcount
• Sale of non-core assets 293 million in cash
  and 672 million in debt reduction in 2003
  and year to date 2004 with more to come
• Delevering of balance sheet In connection with
  asset sales and with mandatory offer
• Optimizing plant operations / Investment in PRB
  conversion,
• fuel handling processes coal handling
  and environmental
• remediation
• Fixing Connecticut and Connecticut on track
  on to California California

27
How are We Making Money Diversified Asset
Portfolio
Northeast

• Our Competitive Advantages
• Sizeable asset base in the right markets
• Long term contracts / relationships with retail
  cooperatives in South Central
• Locational advantage
• Healthy balance sheet
• Flexibility to act in best interest of
  stakeholders

West
Coal 2,407 MW30
Oil2,350 MW 30
Gas 693 MW 56
Dual Fuel 628 MW 44
Dual Fuel 2,284 MW 29
Gas842 MW 11
South Central

• Core Regions
• Northeast
• South Central
• West

Gas 980 MW 40
Coal 1,489 MW 60

• Our Competitive Advantages
• Sizeable asset base in the right markets
• Long-term contracts / relationships with retail
  cooperatives in South Central
• Locational advantage
• Healthy balance sheet
• Flexibility to act in best interest of
  stakeholders

• Relative Weaknesses
• Aging fleet
• Gaps in our ability to serve load shaped contracts

Fuel, dispatch and market diversified asset
portfolio
Other North America includes 4,172 MW outside
of core regions
28
Market Environment in which We Operate
On the deregulation / reregulation spectrum, we
are entering a period of stasis. The five ISOs
will move forward methodically to refine their
market model. Other regions are static. Further
utility disaggregation is unlikely. Industry
consolidation, while desirable, necessary and
inevitable, will be delayed by the merchant
generation industrys current debt
mountain. Supply-demand imbalance has peaked,
but how long we remain in the commodity price
cycle trough is an open issue. The timing of the
correction depends much more on the actions of
industry participants (supply) than on the
strength of economic recovery (demand). While
one can argue about the sustainability of
currently high gas prices, higher gas volatility
(on a delivered basis) is a near certainty. And
now Eastern coal has shown more volatility.

• Deregulation / Reregulation
• Industry Structure
• Market Fundamentals
• Role of Fuel

29
Keys to Success in Merchant Generation Industry
Four imperatives
Four fundamentals

• Capital intensive - yesLabor intensive - no

• Highly cyclical, inelastic demand, supply driven

• Pure commodity, but inability to store cause very
  high volatility

3
MUST have scale in key markets
4
MUST develop and expand our route to market

• Assets relatively illiquid and generally movable

30
Assessing NRG

• Relative to the Four Imperatives
• Competitive Generation Excellent. 350/kW
  enterprise value across fleet 50 discount
  to replacement cost
• Geographic Diversity Excellent. Core 3
  domestic markets and 2 international markets
• Scale Better than average. One of the
  bigger generators in the Northeast but
  not scale in the true sense
• Route to Market Average. No retail customers,
  trading activity slowly expanding

-
31
Hedging in the Future
What are the elements of a successful strategy to
hedge a substantial portion of our generation
capacity with retail load providers?
We must own . . .
. . . plus it helps if we have . . .

• Generation which is price competitive on both a
  SRMC and LRMC basis
• Generation that competitively serves load-shaping
  requirements through base, intermediate and
  peaking capacity
• Generation, from various fuels, such that we can
  offer the retail load providers at least a
  partial hedge against gas price spikes

• The scale to negotiate as equals
• Limited or no competitors with comparable
  capabilities

32
Brownfield Development an Opportunity and a
Necessity
Our key assets, while not as old as they seem,
are aging
Typical life expectancy range of a steam
boiler with typical maintenance based on
equivalent operating years.
Years
Age (years)
Equivalent Operating Years
The redevelopment of brownfield coal sites using
clean coal technology should be cheaper, quicker
and cleaner
33
Repowering Opportunities 2008 and Beyond
Brownfield sites provide a distinct advantage in
siting new generation projects due to existing
infrastructure and transmission access.

• What are the ingredients to brownfield success?
• Advance planning
• Cheaper, quicker, cleaner
• Immediate relief
• Long-term PPA

Status
Replaced(MW)
New Capacity(net MW)
Project
Planning Permitting
350
618
El Segundo Combined Cycle
Permitting
New
675
Big Cajun Supercritical Coal-Fired
Concept
300
600
Arthur Kill Combined Cycle
Concept
Big Cajun Repowering
 
 
Concept
600
675
Dunkirk Repowering
Concept
300 - 900
880
Encina Combined Cycle
Concept
700
675
Huntley Repowering
Concept
182 - 767
675 - 900
Indian River Repowering
Concept
112
250 - 450
Somerset Repowering
Concept
0
659
Norwalk Harbor Combined Cycle
Concept
400
810
Middletown Combined Cycle
34
Acquisitions - Why?
Why would a company that aggressively acquired
its way into Chapter 11 consider an active
acquisition strategy just a few months after
emergence?

• Economies of scale (GA, operations, procurement)
• Average down portfolio LRMC recovery (EV/kW
  capacity)
• Increase market diversity
• Enhance ability to successfully contract with
  retail load providers
• Improve optionality in capacity markets
• Secure fuel supply for our plant
• Grow earnings and earnings potential (but not at
  the expense of the balance sheet)

35
Select Acquisitions Enhancing our Regional
Businesses
At a time when power plants are selling at a
significant discount to replacement cost, we may
have attractively priced opportunities to fill
out gaps in our regional line-ups.
Our line-up range
Upstate New York merit order
Entergy merit order
/MWh
/MWh
120
120
6.20/MMBtu gas
6.20/MMBtu gas
4.20/MMBtu gas
4.20/MMBtu gas
100
100
80
80
60
60
40
40
20
20
0
0
0
10,000
20,000
30,000
40,000
50,000
0
500
1,000
1,500
2,000
2,500
MWs
MWs
36
NRG Working Towards a Super-Regional Business
Model

• We are transitioning NRG from a loose collection
  of power plants into three coherent regional
  businesses, each focused on developing as a
  foundation to their businesses, commercial
  relationships with the in-market retail load
  providers

West
South Central
Northeast
Region
60,000
50,000
180,000
Total MWs
1,321 (2,692 gross)
2,469
7,884
Our MWs
2 (4 gross)
5
4
Market Share
Locational advantage
Base load coal /long term contracts
Base load coal
Principal Strength
Lack of capacitymarket
Shortfall of our generation relative to load we
serve
Reduction intransmission constraints
PrincipalVulnerability
37
Summary - The New NRG
Extracting maximum value from existing fleet
Reinvestment in repowering life extension of key
assets
Northeast
WestCoast
SouthCentral
Selective acquisitions to fill out regional
line-ups
Objective To create a set of regional businesses
with sustainable low (total) cost, fuel
diversified asset portfolio competitively
positioned to secure their key customers
38
(No Transcript)
39
Supplemental information
40
Adjusted EBITDA Reconciliation
The following table summarizes the calculation of
EBITDA and provides a reconciliation to net
income/(loss) for the periods indicated
Reorganized NRG Predecessor
NRG
March 31, 2004
March 31, 2003 (Dollars in thousands)
Net Income / (Loss) 30,235
(12,632) Plus Income Tax Expense
14,208 32,878
Interest expense, excluding amortization of
debt issuance costs
and debt discount/ (premium) noted on the
following page 78,543 169,345
Depreciation and amortization
58,637 64,071 WCP CDWR contract
amortization (included in equity in
earnings of unconsolidated affiliates)
30,968 ---- Amortization of
power contracts 16,477
---- Amortization of emission credits
6,270 ---- Amortization of
debt issuance costs and debt
discount/(premium) 23,639
6,732 EBITDA 258,977
260,394 Plus (Income) on Discontinued
Operations, net of Income taxes
(2,391) (161,550) Corporate
relocation charges 1,116
---- Reorganization charges
6,250 ---- Restructuring and
impairment charges ----
22,136 Write downs and losses on sales of
equity method investments 1,738
16,591 Adjusted EBITDA 265,690
137,571
41
Adjusted EBITDA Reconciliation (cont.)
EBITDA, Adjusted EBITDA and adjusted net income
are non-GAAP financial measures. These
measurements are not recognized in accordance
with GAAP and should not be viewed as an
alternative to GAAP measures of performance. The
presentation of Adjusted EBITDA and adjusted net
income should not be construed as an inference
that NRGs future results will be unaffected by
unusual or non-recurring items. EBITDA
represents net income before interest, taxes,
depreciation and amortization. EBITDA is
presented because NRG considers it an important
supplemental measure of its performance and
believe debt-holders frequently use EBITDA to
analyze operating performance and debt service
capacity. EBITDA has limitations as an analytical
tool, and you should not consider it in
isolation, or as a substitute for analysis of our
operating results as reported under GAAP. Some of
these limitations are EBITDA does not reflect
cash expenditures, or future requirements for
capital expenditures, or contractual
commitments EBITDA does not reflect changes
in, or cash requirements for, working capital
needs EBITDA does not reflect the significant
interest expense, or the cash requirements
necessary to service interest or principal
payments, on debts Although depreciation and
amortization are non-cash charges, the assets
being depreciated and amortized will often have
to be replaced in the future, and EBITDA does
not reflect any cash requirements for such
replacements and Other companies in this
industry may calculate EBITDA differently than
NRG does, limiting its usefulness as a
comparative measure. Because of these
limitations, EBITDA should not be considered as a
measure of discretionary cash available to use to
invest in the growth of NRGs business. NRG
compensates for these limitations by relying
primarily on our GAAP results and using EBITDA
and Adjusted EBITDA only supplementally. See the
statements of cash flow included in the financial
statements that are a part of this press
release. Adjusted EBITDA is presented as a
further supplemental measure of operating
performance. Adjusted EBITDA represents EBITDA
adjusted for reorganization, restructuring,
impairment and corporate relocation charges,
discontinued operations, and write downs and
losses on the sales of equity method investments
factors which we do not consider indicative of
future operating performance. The reader is
encouraged to evaluate each adjustment and the
reasons NRG considers it appropriate for
supplemental analysis. As an analytical tool,
Adjusted EBITDA is subject to all of the
limitations applicable to EBITDA. In addition, in
evaluating Adjusted EBITDA, the reader should be
aware that in the future NRG may incur expenses
similar to the adjustments in this presentation.