First Quarter 2004 Financial Results May 11, 2004

First Quarter 2004 Financial Results First Quarter 2004 Financial Results

May 11, 2004May 11, 2004

2

Safe Harbor StatementSafe 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 FERC’s 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 NRG’s 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

Progress Year-to-Date

Q1 Financial Results

Strategy

Progress Year-to-Date

Q1 Financial Results

Strategy

AgendaAgenda

4

Strong first quarter operating performanceStrong first quarter operating performance– $266 million in adjusted EBITDA$266 million in adjusted EBITDA– $316 million in Free Cash Flow$316 million in Free Cash Flow

Liquidity continues to strengthen – $1.4 billion at Liquidity continues to strengthen – $1.4 billion at end of Q1end of Q1

Post-Chapter 11 emergence plan solidly on track Post-Chapter 11 emergence plan solidly on track

Internal reorganization proceeding in Internal reorganization proceeding in accordance with planaccordance with plan

HighlightsHighlights

5

The First 100 Days’ ObjectivesThe First 100 Days’ Objectives

Financial Priorities

Organizational Priorities

4. Resolve commercial issues with Connecticut plants

1. Simplify capital structure

3. Reduce borrowing costs

2. Ensure our liquidity

1. Keep plants running safely, reliably and efficiently

Operational Priorities

2. Increase contracted portion of merchant generation

3. Maintain momentum in asset sale program

2. Expedited phase-out of external advisers

3. Redirected management team

4. Restructured corporate organization

1. New CFO

6

Operational Performance - Core RegionsOperational Performance - Core Regions

Our plants in the Northeast dealt successfully with periods of unusually Our plants in the Northeast dealt successfully with periods of unusually cold weathercold weather

Our fuel diverse fleet of generators in New York and Connecticut, Our fuel diverse fleet of generators in New York and Connecticut, helped maintain affordable electric prices during gas price spikeshelped maintain affordable electric prices during gas price spikes

The Western Region successfully completed thirteen planned outages The Western Region successfully completed thirteen planned outages at seven different plantsat seven different plants

1,321

2,469

7,884

Net ownedcapacity

MW

In-marketavailability

%

Net capacityfactor

%

Average heatrate

(Btu / kWh)

Equivalentavailability

%

Generation(MWh)

Region

11,600

10,700

11,400

9918720.9 millionWest

9857852.8 millionSouth Central

9538812.9 millionNortheast

7

0

2,000

4,000

6,000

8,000

10,000

Entergy New York PJM Nepool

GigaWatt hours

“In the money”Generation (1)

Fuel Hedges (3)

Energy Sales (2)

Operational – 2004 Hedging ActivityOperational – 2004 Hedging Activity

(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 plant’s heat rate, to an equivalent amount of generation (MWh)

For the balance of 2004, the Company has hedged 48% of “In the money” 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 generation with forward energy commitments and has locked in the energy margin

from those sales by purchasing 80% of the forward fuel requirementsfrom those sales by purchasing 80% of the forward fuel requirements

8

We continue to make progress rationalizing the We continue to make progress rationalizing the Company’s non-core assets for value:Company’s non-core assets for value:

Asset Sales - 2004Asset Sales - 2004

NameName LocationLocation

Actual or expectedActual or expectedcash proceedscash proceeds

(Millions)(Millions)

Balance Balance Sheet Debt Sheet Debt

(Millions)(Millions) StatusStatus

Various $20 $45

Batesville

Others (4)

Mississippi $27 $292 Executed PSA

Loy Yang A Australia $27 N/A Completed

Cobee Bolivia $50 $24 Completed

Calpine Cogen Various, U.S. $3 N/A Completed

PERC Maine $17 $25 Completed

Executed PSAs

TOTAL $144 $386

RMR AgreementsRMR Agreements

FERC has approved, subject to hearing and refund, NRG’s RMR agreements for FERC has approved, subject to hearing and refund, NRG’s RMR agreements for Middletown, Montville and Devon units 11-14 (1,392 MW in total) Middletown, Montville and Devon units 11-14 (1,392 MW in total)

These RMR agreements will remain in effect until the LICAP market is implementedThese RMR agreements will remain in effect until the LICAP market is implemented

FERC has also approved, subject to hearing and refund, NRG’s Cost Tracker for FERC has also approved, subject to hearing and refund, NRG’s Cost Tracker for scheduled expenses incurred until LICAP implementation scheduled expenses incurred until LICAP implementation

The RMR Agreements, together with the Cost Tracker, will cover NRG’s cost of service for The RMR Agreements, together with the Cost Tracker, will cover NRG’s cost of service for Middletown, Montville and Devon 11-14 until the LICAP market is implementedMiddletown, Montville and Devon 11-14 until the LICAP market is implemented

FERC had previously approved, subject to hearing and refund, an RMR Agreement for 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 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.reliability after April 2004 - as a result, NRG plans to retire Unit 8 in May.

Locational Installed Capacity (LICAP) market Locational Installed Capacity (LICAP) market

Proposed LICAP market in New England that would pay Norwalk, Connecticut Jet Power, 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-monthMiddletown, 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 wholeShould provide a positive cash flow for the Connecticut fleet as a whole

FERC is expected to approve the basic LICAP market design sometime this summerFERC is expected to approve the basic LICAP market design sometime this summer

Connecticut StatusConnecticut Status

** These RMR agreements are expected to contribute up to $30 million of revenue per quarter These RMR agreements are expected to contribute up to $30 million of revenue per quarter **

10

Current Objectives: ChecklistCurrent Objectives: Checklist

Financial Priorities

Organizational Priorities

4. Resolve commercial issues with Connecticut plants

1. Simplify capital structure

3. Reduce borrowing costs

2. Ensure our liquidity

1. Keep plants running safely, reliablyand efficiently

Operational Priorities

2. Increase contracted portion ofmerchant generation

3. Maintain momentum in assetsale program

2. Expedited phase-out ofexternal advisers

3. Redirected management team

4. Restructured corporate organization

1. New CFO

Corporate debt maturities of less than $53 million due over next six years

$2.7 billion refinanced two-tier security structure withweighted average cost of 6.8% (revolver undrawn)

Liquidity of nearly $1.4 billion

Bob Flexon appointed as CFO

Bankruptcy legal/financial advisers role severelycurtailed; positive 1Q ’04 cash flow impact

Corporate restructuring with regional emphasis

Streamlined HQ to be relocated in core region

$146 million in asset dispositions as of May 7, 2004 completed- $97 million in cash, $49 million in debt reduction

RMR agreements approved by FERC. LICAP expected summer or fall 2004

High percentage of coal requirements contracted andsubstantial portion of economic energy production sold forward

96% IMA from coal-fired fleet, safety record better than industry standard

11

Financial Results

Financial Results

12

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

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

First Quarter Financial HighlightsFirst Quarter Financial Highlights

13

Operating revenues

621

Operating income

125

Net income

30

EBITDA

259

Adjusted EBITDA

266

Operating revenues

621

Operating income

125

Net income

30

EBITDA

259

Adjusted EBITDA

266

$ millions$ millions

Key Financial HighlightsKey Financial Highlights

14

1st Quarter 2004 Spark Spreads -North America1st 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

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 costs2 Does not include LaGen

15

North American Generation by FuelNorth American Generation by Fuel

58.34

51.50

16.51

Fuel Cost$/MWh

208,725

46,302

70,689

91,734

Fuel Cost Q1’04 ($000)

7,721,015

793,684

1,372,617

5,554,714

MWh Q1 ‘04

694,066

106,038

259,725

328,303

Fuel Cost‘03 ($000)

59.86

47.41

15.65

Fuel Cost$/MWh

28,221,569

1,771,370

5,478,208

20,971,991

MWh ‘03Fuel

Total

Oil*

Gas*

Coal

* Gas and Oil MWh are estimated since certain assets are dual fuel* Gas and Oil MWh are estimated since certain assets are dual fuel

0% 20% 40% 60% 80% 100%

'03 MWh

'03 Fuel Cost

Q1 '04 MWh

Q1 '04 Fuel Cost

CoalGasOil

16

EBITDA by Operating SegmentEBITDA 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

($ 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

Adjusted EBITDAAdjusted EBITDA 266266

Interest PaymentsInterest Payments (43)(43)

Income Tax PaymentsIncome Tax Payments (3)(3)

Other funds used by operationsOther funds used by operations (20)(20)

FFOFFO 200200

Other working capital changesOther working capital changes 2525

Xcel settlement, netXcel settlement, net 125125

CFOCFO 350350

Asset SalesAsset Sales 33

CapExCapEx (35)(35)

Other Cash Used by InvestingOther Cash Used by Investing (2)(2)

FCFFCF 316316

Cash Used by FinancingCash Used by Financing (38)(38)

Other sources of cashOther sources of cash 22

Net Cash FlowNet Cash Flow 280280

First Quarter Cash FlowFirst Quarter Cash Flow


18

($8.4) million($8.4) million100 bps100 bpsInterest ratesInterest rates

$39.0 million$39.0 million$1.00/mmbtu$1.00/mmbtuNatural GasNatural Gas

($0.2) million($0.2) million$1.00/ton$1.00/tonCoalCoal

($1.4) million($1.4) million$1.00/bbl$1.00/bblOilOil

Results in the Results in the following change tofollowing change to2004 pre-tax income2004 pre-tax income

Factor Factor Increased by:Increased by:FactorsFactors

Pricing as of 3/31/04, assuming current hedged positionsPricing as of 3/31/04, assuming current hedged positions

2004 Sensitivity Analysis2004 Sensitivity Analysis

19

LiquidityLiquidity

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

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


20

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

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

Credit/CollateralCredit/Collateral


21

Near-Term Corporate Debt MaturitiesNear-Term Corporate Debt Maturities

** Less than $53 million in corporate debt maturities Less than $53 million in corporate debt maturities in aggregate over remainder of decade in aggregate over remainder of decade **

0

5

10

15

20

2004 2005 2006 2007 2008 2009

$ millions

22

Independent Auditors

Staff Appointment– Controller – Chief Risk Officer– Director Internal Audit– Director Planning and Analysis– Treasurer

Independent Auditors

Staff Appointment– Controller – Chief Risk Officer– Director Internal Audit– Director Planning and Analysis– Treasurer

Other ItemsOther Items

23

ConclusionsConclusions

Strong financial results, cash flow and liquidity

Improving our reporting to enhance understanding of results

Building the team

Strong financial results, cash flow and liquidity

Improving our reporting to enhance understanding of results

Building the team

24

Strategy:

“Beyond Back to Basics”

Strategy:

“Beyond Back to Basics”

25

Corporate Strategy – Industry PerspectiveCorporate 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

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

MPoM MPoM BtB BtB BtBMPoMMPoM MPoM

“Asset-light”

19981998 19991999 20032003 2004200419971997 2001200120002000 20022002IPP IPP

Industry Industry StrategiesStrategies

Mothball marginal assetsMothball marginal assets

GreenfieldGreenfield

TradingTrading

Leverage off logistics platformLeverage off logistics platform(service provider)(service provider)

Fuel mismatchFuel mismatch

Economy–driven Economy–driven (demand side) price recovery(demand side) price recovery

Sell non-core assetsSell non-core assets

Cut G&ACut G&A

ReliantReliantAlleghenyAlleghenyWilliamsWilliamsEl PasoEl PasoCalpineCalpineDynegyDynegyCurrent Stated StrategiesCurrent Stated Strategies

Exit power businessExit power business

Trading

26

NRG – Back to BasicsNRG – Back to Basics

Our Back to Basics strategy is in full swing Our Back to Basics strategy is in full swing and visible progress is being made:and visible progress is being made:

Reduced corporate burdenReduced corporate burden 33% reduction in 33% reduction in corporate headcountcorporate headcount

Sale of non-core assetsSale of non-core assets $293 million in cash and $672 $293 million in cash and $672 million in debt reduction in 2003 million in debt reduction in 2003 and year to date 2004 with more and year to date 2004 with more to cometo come

Delevering of balance sheetDelevering of balance sheet In connection with asset sales In connection with asset sales and with mandatory offer and with mandatory offer

Optimizing plant operations /Optimizing plant operations / Investment in PRB conversion,Investment in PRB conversion,fuel handling processesfuel handling processes coal handling and environmental coal handling and environmental

remediationremediation

Fixing Connecticut and Fixing Connecticut and Connecticut on track; on to Connecticut on track; on to California California CaliforniaCalifornia

Our Back to Basics strategy is in full swing Our Back to Basics strategy is in full swing and visible progress is being made:and visible progress is being made:

Reduced corporate burdenReduced corporate burden 33% reduction in 33% reduction in corporate headcountcorporate headcount

Sale of non-core assetsSale of non-core assets $293 million in cash and $672 $293 million in cash and $672 million in debt reduction in 2003 million in debt reduction in 2003 and year to date 2004 with more and year to date 2004 with more to cometo come

Delevering of balance sheetDelevering of balance sheet In connection with asset sales In connection with asset sales and with mandatory offer and with mandatory offer

Optimizing plant operations /Optimizing plant operations / Investment in PRB conversion,Investment in PRB conversion,fuel handling processesfuel handling processes coal handling and environmental coal handling and environmental

remediationremediation

Fixing Connecticut and Fixing Connecticut and Connecticut on track; on to Connecticut on track; on to California California CaliforniaCalifornia

27

How are We Making Money: Diversified Asset Portfolio*How are We Making Money: Diversified Asset Portfolio*

Our Competitive AdvantagesOur Competitive Advantages

Sizeable asset base in the right marketsSizeable asset base in the right markets

Long term contracts / relationships with retail Long term contracts / relationships with retail cooperatives in South Centralcooperatives in South Central

Locational advantageLocational advantage

Healthy balance sheetHealthy balance sheet

Flexibility to act in best interest of stakeholdersFlexibility to act in best interest of stakeholders



Long term contracts / relationships with retail Long term contracts / relationships with retail cooperatives in South Centralcooperatives in South Central




South CentralSouth Central

WestWest

NortheastNortheast

Gas 980 MW

40% Coal 1,489 MW

60%

Gas 693 MW

56%

Dual Fuel 628 MW

44%

Relative WeaknessesRelative Weaknesses

Aging fleetAging fleet

Gaps in our ability to serve Gaps in our ability to serve load shaped contractsload shaped contracts

Relative WeaknessesRelative Weaknesses

Aging fleetAging fleet

Gaps in our ability to serve Gaps in our ability to serve load shaped contractsload shaped contracts

Core Regions:Core Regions:

• NortheastNortheast

• South CentralSouth Central

• WestWest

Fuel, dispatch Fuel, dispatch and market and market diversified diversified

asset portfolioasset portfolio



Long-term contracts / relationships with retail Long-term contracts / relationships with retail cooperatives in South Centralcooperatives in South Central






Long-term contracts / relationships with retail Long-term contracts / relationships with retail cooperatives in South Centralcooperatives in South Central



Flexibility to act in best interest of stakeholdersFlexibility to act in best interest of stakeholders* Other North America includes 4,172 MW outside of core regions

GasGas842 MW 842 MW

11%11%

Coal 2,407 MW

30%

Dual Fuel 2,284 MW

29%

Oil2,350 MW

30%

28

Market Environment in which We OperateMarket Environment in which We Operate

Deregulation / Deregulation / ReregulationReregulation

Industry StructureIndustry Structure

Market Market FundamentalsFundamentals

Role of FuelRole of Fuel

Deregulation / Deregulation / ReregulationReregulation

Industry StructureIndustry Structure

Market Market FundamentalsFundamentals

Role of FuelRole of Fuel

On the deregulation / reregulation spectrum, we are On the deregulation / reregulation spectrum, we are entering a period of stasis. The five ISOs will move entering a period of stasis. The five ISOs will move forward methodically to refine their market model. forward methodically to refine their market model. Other regions are static.Other regions are static.

Further utility disaggregation is unlikely. Industry Further utility disaggregation is unlikely. Industry consolidation, while desirable, necessary and inevitable, consolidation, while desirable, necessary and inevitable, will be delayed by the merchant generation industry’s will be delayed by the merchant generation industry’s current debt mountain.current debt mountain.

Supply-demand imbalance has peaked, but how long Supply-demand imbalance has peaked, but how long we remain in the commodity price cycle trough is an we remain in the commodity price cycle trough is an open issue. The timing of the correction depends much open issue. The timing of the correction depends much more on the actions of industry participants (supply) more on the actions of industry participants (supply) than on the strength of economic recovery (demand).than on the strength of economic recovery (demand).

While one can argue about the sustainability of While one can argue about the sustainability of currently high gas prices, higher gas volatility (on a currently high gas prices, higher gas volatility (on a delivered basis) is a near certainty. And now Eastern delivered basis) is a near certainty. And now Eastern coal has shown more volatility.coal has shown more volatility.

On the deregulation / reregulation spectrum, we are On the deregulation / reregulation spectrum, we are entering a period of stasis. The five ISOs will move entering a period of stasis. The five ISOs will move forward methodically to refine their market model. forward methodically to refine their market model. Other regions are static.Other regions are static.

Further utility disaggregation is unlikely. Industry Further utility disaggregation is unlikely. Industry consolidation, while desirable, necessary and inevitable, consolidation, while desirable, necessary and inevitable, will be delayed by the merchant generation industry’s will be delayed by the merchant generation industry’s current debt mountain.current debt mountain.

Supply-demand imbalance has peaked, but how long Supply-demand imbalance has peaked, but how long we remain in the commodity price cycle trough is an we remain in the commodity price cycle trough is an open issue. The timing of the correction depends much open issue. The timing of the correction depends much more on the actions of industry participants (supply) more on the actions of industry participants (supply) than on the strength of economic recovery (demand).than on the strength of economic recovery (demand).

While one can argue about the sustainability of While one can argue about the sustainability of currently high gas prices, higher gas volatility (on a currently high gas prices, higher gas volatility (on a delivered basis) is a near certainty. And now Eastern delivered basis) is a near certainty. And now Eastern coal has shown more volatility.coal has shown more volatility.

29

MUST have scale in key MUST have scale in key marketsmarkets

MUST develop and expand MUST develop and expand our route to marketour route to market

Four imperativesFour imperatives

MUST own a generation MUST own a generation portfolio at a competitive cost portfolio at a competitive cost relative to replacement costrelative to replacement cost

11

MUST be geographically MUST be geographically diversified, in multiple diversified, in multiple marketsmarkets

22

33

44

Highly cyclical, inelastic Highly cyclical, inelastic demand, supply drivendemand, supply driven

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

Assets relatively illiquid Assets relatively illiquid and generally movableand generally movable

Four fundamentalsFour fundamentals

Capital intensive - yes;Capital intensive - yes;Labor intensive - noLabor intensive - no

Keys to Success in Merchant Generation Industry:Keys to Success in Merchant Generation Industry:

30

Relative to the Four ImperativesRelative to the Four Imperatives

Competitive GenerationCompetitive Generation Excellent. $350/kW enterprise value Excellent. $350/kW enterprise value across fleet – 50% discount to across fleet – 50% discount to replacement costreplacement cost

Geographic DiversityGeographic Diversity Excellent. Core – 3 domestic markets Excellent. Core – 3 domestic markets and 2 international marketsand 2 international markets

ScaleScale Better than average. One of the Better than average. One of the bigger generators in the Northeast; bigger generators in the Northeast; but not scale in the true sensebut not scale in the true sense

Route to MarketRoute to Market Average. No retail customers, Average. No retail customers, trading activity slowly expanding trading activity slowly expanding

Relative to the Four ImperativesRelative to the Four Imperatives

Competitive GenerationCompetitive Generation Excellent. $350/kW enterprise value Excellent. $350/kW enterprise value across fleet – 50% discount to across fleet – 50% discount to replacement costreplacement cost

Geographic DiversityGeographic Diversity Excellent. Core – 3 domestic markets Excellent. Core – 3 domestic markets and 2 international marketsand 2 international markets

ScaleScale Better than average. One of the Better than average. One of the bigger generators in the Northeast; bigger generators in the Northeast; but not scale in the true sensebut not scale in the true sense

Route to MarketRoute to Market Average. No retail customers, Average. No retail customers, trading activity slowly expanding trading activity slowly expanding

Assessing NRGAssessing NRGAssessing NRGAssessing NRG

--

31

Hedging – in the FutureHedging – in the Future

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

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

What are the elements of a successful strategy to hedge a substantial portion of our generation capacity with retail load providers?

What are the elements of a successful strategy to hedge a substantial portion of our generation capacity with retail load providers?

We must own . . .We must own . . . . . . plus it helps if we have . . .. . . plus it helps if we have . . .

The scale to negotiate as equals

Limited or no competitors with comparable capabilities

The scale to negotiate as equals

Limited or no competitors with comparable capabilities

32

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The redevelopment of brownfield coal sites using clean coal The redevelopment of brownfield coal sites using clean coal technology should be cheaper, quicker and cleanertechnology should be cheaper, quicker and cleaner

Age (years) Equivalent Operating Years

Years Typical life expectancy range of a steam boilerTypical life expectancy range of a steam boilerwith typical maintenance based on equivalent with typical maintenance based on equivalent operating years.operating years.

Our key assets, while not as old as they seem, are agingOur key assets, while not as old as they seem, are aging

Brownfield Development – an Opportunity and a NecessityBrownfield Development – an Opportunity and a Necessity

33

Brownfield sites provide a distinct advantage in siting new Brownfield sites provide a distinct advantage in siting new generation projects due to existing infrastructure and generation projects due to existing infrastructure and transmission access.transmission access.

Repowering Opportunities 2008 and BeyondRepowering Opportunities 2008 and Beyond

ConceptConcept400400810810Middletown Combined CycleMiddletown Combined Cycle

ConceptConcept00659659Norwalk Harbor Combined CycleNorwalk Harbor Combined Cycle

ConceptConcept112112250 - 450250 - 450Somerset RepoweringSomerset Repowering

ConceptConcept182 - 767182 - 767675 - 900675 - 900Indian River RepoweringIndian River Repowering

ConceptConcept700700675675Huntley Repowering Huntley Repowering

ConceptConcept300 - 900300 - 900880880Encina Combined CycleEncina Combined Cycle

ConceptConcept600600675675Dunkirk RepoweringDunkirk Repowering

ConceptConcept

Big Cajun RepoweringBig Cajun Repowering

ConceptConcept300300600600Arthur Kill Combined CycleArthur Kill Combined Cycle

PermittingPermittingNewNew675675Big Cajun Supercritical Coal-FiredBig Cajun Supercritical Coal-Fired

Planning & PermittingPlanning & Permitting350350618618El Segundo Combined Cycle El Segundo Combined Cycle

StatusStatusReplaceReplaced(MW)d(MW)

New CapacityNew Capacity(net MW)(net MW)ProjectProject

What are the What are the ingredients to ingredients to brownfield brownfield success?success?

• Advance Advance planning planning

• Cheaper, Cheaper, quicker, cleaner quicker, cleaner

• Immediate reliefImmediate relief

• Long-term PPALong-term PPA

34

Economies of scale (G&A, operations, procurement)Economies of scale (G&A, operations, procurement)

Average down portfolio LRMC recovery (EV/kW capacity)Average down portfolio LRMC recovery (EV/kW capacity)

Increase market diversityIncrease market diversity

Enhance ability to successfully contract with retail load Enhance ability to successfully contract with retail load providersproviders

Improve optionality in capacity marketsImprove optionality in capacity markets

Secure fuel supply for our plantSecure fuel supply for our plant

Grow earnings and earnings potential (but Grow earnings and earnings potential (but notnot at the expense at the expense of the balance sheet)of the balance sheet)

Why would a company that aggressively acquired its Why would a company that aggressively acquired its way into Chapter 11 consider an active acquisition way into Chapter 11 consider an active acquisition strategy just a few months after emergence?strategy just a few months after emergence?

Acquisitions - Why?Acquisitions - Why?

35

Select Acquisitions – Enhancing our Regional BusinessesSelect Acquisitions – Enhancing our Regional Businesses

MWs MWs

$/MWh

At a time when power plants are selling at a significant At a time when power plants are selling at a significant discount to replacement cost, we may have attractively priced discount to replacement cost, we may have attractively priced opportunities to fill out gaps in our regional line-ups.opportunities to fill out gaps in our regional line-ups.

= Our line-up range= Our line-up range

Upstate New York merit orderUpstate New York merit order Entergy merit orderEntergy merit order

0

20

40

60

80

100

120

0 10,000 20,000 30,000 40,000 50,000

$6.20/MMBtu gas$4.20/MMBtu gas

0

20

40

60

80

100

120

0 500 1,000 1,500 2,000 2,500

$6.20/MMBtu gas$4.20/MMBtu gas

$/MWh

36

NRG: Working Towards a Super-Regional Business ModelNRG: 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

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

Locational advantageLocational advantageBase load coal /Base load coal /long term contractslong term contracts

Base load coalBase load coalPrincipal StrengthPrincipal Strength

2% (4% gross)2% (4% gross)5%5%4%4%Market ShareMarket Share

1,321 (2,692 gross)1,321 (2,692 gross)2,4692,4697,8847,884Our MWsOur MWs

Lack of capacityLack of capacitymarketmarket

Shortfall of our Shortfall of our generation relative generation relative to load we serveto load we serve

Reduction inReduction intransmission transmission constraintsconstraints

PrincipalPrincipalVulnerabilityVulnerability

60,00060,00050,00050,000180,000180,000Total MWsTotal MWs

WestWestSouth CentralSouth CentralNortheastNortheastRegionRegion

37

Summary - The New NRGSummary - The New NRG

WestWestCoastCoast

SouthSouthCentralCentral

NortheastNortheast

Extracting Extracting maximum maximum value from value from existing fleetexisting fleet

Reinvestment Reinvestment in repowering in repowering life extension life extension of key assetsof key assets

Selective Selective acquisitions to fill acquisitions to fill

out regional line-upsout regional line-ups

Objective: To create a set of regional businesses with Objective: To create a set of regional businesses with sustainable low (total) cost, fuel diversified asset portfolio sustainable low (total) cost, fuel diversified asset portfolio

competitively positioned to secure their key customerscompetitively positioned to secure their key customers

38

39

Supplemental informationSupplemental information

40

Adjusted EBITDA ReconciliationAdjusted EBITDA ReconciliationThe 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

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Adjusted EBITDA Reconciliation (cont.)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 NRG’s 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 NRG’s 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.

Documents

First Quarter 2004 Financial Results May 11, 2004