Deutsche Bank Electric Power Conference - PowerPoint PPT Presentation

About This Presentation
Title:

Deutsche Bank Electric Power Conference

Description:

This presentation contains forward-looking statements within ... Dynegy. Current Stated Strategies. Exit power business. Trading. 7. Back to Basics - Strategy ... – PowerPoint PPT presentation

Number of Views:35
Avg rating:3.0/5.0
Slides: 12
Provided by: MelanieG3
Category:

less

Transcript and Presenter's Notes

Title: Deutsche Bank Electric Power Conference


1
Deutsche Bank Electric Power Conference
  • June 14, 2004

2
Safe Harbor Statement
  • This 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. Such
    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, deployment of capital,
    development of major capital expenditures
    approval process, refining our risk management
    procedures, strengthening our coal procurement
    supply chain, resolution of commercial issues
    with our California plants, successfully
    completed targeted asset sales, debt reduction,
    developing domestic regional strategic plans,
    refining our international strategy and
    developing an acquisition strategy and process.
    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, unanticipated
    outages at our generation facilities, our ability
    to convert facilities to burn western coal, our
    substantial indebtedness and the possibility that
    we may incur additional indebtedness, adverse
    results in current and future litigation, the
    willingness of counterparties to negotiate new
    contracts in California, the failure to develop
    and successfully implement strategies and
    processes, and the amount of proceeds from asset
    sales.
  • 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
    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
First Quarter 2004 Highlights
  • Strong first quarter operating performance
  • 266 million in adjusted EBITDA
  • 316 million in Free Cash Flow (includes 125
    million from Xcel distributions and 3 million in
    asset sale proceeds)
  • 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

4
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 noncore 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

5
Our Core Regional Businesses
Northeast
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
Gas 980 MW 40
Regional concentrations with fuel and
dispatch-level diversity
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

Other North America includes 4,172 MW outside
of core regions
6
Corporate Strategy Moving beyond Back to Basics
  • 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
7
Back to Basics - Strategy
Four fundamentals
Four imperatives
1
  • Capital intensive - yesLabor intensive - no

MUST accumulate generating portfolio at
competitive cost
  • Highly cyclical, inelastic demand, supply driven

2
MUST be geographically diversified, in multiple
markets
  • Pure commodity, but inability to store causes
    very high volatility

3
MUST develop scale in key markets
4
MUST develop and expand our route to market
through contracting with retail load providers,
trading, direct sales, etc.
  • Assets relatively illiquid and generally immovable

8
Why is Scale Important?
  • Economies in procurement, staffing, etc
  • Flexibility in operational regimes
  • Diversity of fuel and across merit order enhances
    hedging and reduces risk
  • Reduction in available generation supply
    principally benefits other generators
  • Controlling a fair share of supply is the only
    way to impact the supply demand balance (if only
    by equalizing the negotiating strength between
    the generators and the retail load providers)

9
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 that 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

10
NRG Working Toward 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
11
In Summary - The New NRG
Extracting maximum value from existing fleet
Reinvestment in repowering of key assets
Northeast
WestCoast
SouthCentral
Selective acquisitions to fill out regional
lineups
Objective To create a set of regional businesses
with sustainable low (total) cost, fuel
diversified asset portfolio competitively
positioned to secure their key customers
Write a Comment
User Comments (0)
About PowerShow.com