-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LpMNmsctlq5z/1sO3ncJ25EHQSEcPNZk9iFJkm33QmHVBQ3agxTQeUbjLqbbmhKl 76yjFGlqy6cSVPF/jGW89Q== 0000950123-09-037848.txt : 20090825 0000950123-09-037848.hdr.sgml : 20090825 20090825154530 ACCESSION NUMBER: 0000950123-09-037848 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 33 CONFORMED PERIOD OF REPORT: 20090630 FILED AS OF DATE: 20090825 DATE AS OF CHANGE: 20090825 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NRG ENERGY, INC. CENTRAL INDEX KEY: 0001013871 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 411724239 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-15891 FILM NUMBER: 091034044 BUSINESS ADDRESS: STREET 1: 211 CARNEGIE CENTER STREET 2: - CITY: PRINCETON STATE: NJ ZIP: 08540 BUSINESS PHONE: 609-524-4500 MAIL ADDRESS: STREET 1: 211 CARNEGIE CENTER STREET 2: - CITY: PRINCETON STATE: NJ ZIP: 08540 FORMER COMPANY: FORMER CONFORMED NAME: NRG ENERGY INC DATE OF NAME CHANGE: 19960509 10-Q/A 1 y78353a1e10vqza.htm FORM 10-Q/A e10vqza
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
     
þ   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
     
o   Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 2009
Commission File Number: 001-15891
NRG Energy, Inc.
(Exact name of Registrant as specified in its charter)
     
Delaware   41-1724239
(State or other jurisdiction   (I.R.S. Employer
of incorporation or organization)   Identification No.)
     
211 Carnegie Center Princeton, New Jersey   08540
(Address of principal executive offices)   (Zip Code)
(609) 524-4500
(Registrant’s telephone number, including area code)
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ No o
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
        (Do not check if a smaller reporting company)    
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
     Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes þ No o
     As of July 28, 2009, there were 265,276,841 shares of common stock outstanding, par value $0.01 per share.
 
 

 


TABLE OF CONTENTS

ITEM 6 — EXHIBITS
SIGNATURES
EXHIBIT INDEX
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT


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EXPLANATORY NOTE
          This amendment is being filed in accordance with Rule 405(a)(2)(ii) of Regulation S-T solely to furnish Exhibit 101 to the Form 10-Q for the period ended June 30, 2009. Exhibit 101 consists of the following financial information from NRG Energy, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, formatted in eXtensible Business Reporting Language, or XBRL: (i) Condensed Consolidated Statements of Operations for the fiscal periods ended June 30, 2009 and 2008, (ii) Condensed Consolidated Balance Sheets at June 30, 2009 and December 31, 2008, (iii) Condensed Consolidated Statements of Cash Flows for the fiscal periods ended June 30, 2009 and 2008, and (iv) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text, filed herewith. No other changes have been made to the Form 10-Q.  This Form 10-Q/A speaks as of the original filing date and has not been updated to reflect events occurring subsequent to the original filing date.
          Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933 as amended, are deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
ITEM 6 — EXHIBITS
     
Exhibits    
4.1
  Sixteenth Supplemental Indenture, dated April 28, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiary named therein and Law Debenture Trust Company of New York. (1)
 
   
4.2
  Seventeenth Supplemental Indenture, dated April 28, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiary named therein and Law Debenture Trust Company of New York. (1)
 
   
4.3
  Eighteenth Supplemental Indenture, dated April 28, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiary named therein and Law Debenture Trust Company of New York. (1)
 
   
4.4
  Nineteenth Supplemental Indenture, dated May 8, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiaries named therein and Law Debenture Trust Company of New York.(2)
 
   
4.5
  Twentieth Supplemental Indenture, dated May 8, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiaries named therein and Law Debenture Trust Company of New York.(2)
 
   
4.6
  Twenty-First Supplemental Indenture, dated May 8, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiaries named therein and Law Debenture Trust Company of New York.(2)
 
   
4.7
  Twenty-Second Supplemental Indenture, dated June 5, 2009, among NRG Energy, Inc., the guarantors named therein and Law Debenture Trust Company of New York.(3)
 
   
4.8
  Twenty-Third Supplemental Indenture, dated July 14, 2009, among NRG Energy, Inc., the guarantors named therein and Law Debenture Trust Company of New York.(4)
 
   
10.1A
  Amended and Restated Credit Sleeve and Reimbursement Agreement, dated May 1, 2009, among Reliant Energy Power Supply, LLC, RERH Holdings, LLC, Reliant Energy Retail Holdings, LLC, Reliant Energy Retail Services, LLC, RE Retail Receivables, LLC, Merrill Lynch Commodities, Inc. and Merrill Lynch & Co., Inc. (5)
 
   
10.1B
  Schedules and Exhibits to the Amended and Restated Credit Sleeve and Reimbursement Agreement, dated May 1, 2009 (Portions of this Exhibit have been omitted pursuant to a request for confidential treatment). (5)
 
   
10.2
  Contingent Contribution Agreement, dated May 1, 2009, among NRG Energy, Inc., NRG Retail LLC, RERH Holdings, LLC, Reliant Energy Retail Holdings, LLC and Merrill Lynch Commodities, Inc. (5)
 
   
31.1*
  Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
31.2*
  Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
31.3*
  Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
32*
  Certification of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
 
   
101.INS
  XBRL Instance Document

2


Table of Contents

     
Exhibits    
101.SCH
  XBRL Taxonomy Extension Schema
 
   
101.CAL
  XBRL Taxonomy Extension Calculation Linkbase
 
   
101.DEF
  XBRL Taxonomy Extension Definition Linkbase
 
   
101.LAB
  XBRL Taxonomy Extension Label Linkbase
 
   
101.PRE
  XBRL Taxonomy Extension Presentation Linkbase
 
*   previously filed with Form 10-Q on July 30, 2009
 
(1)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on May 4, 2009
 
(2)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on May 14, 2009
 
(3)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on June 5, 2009
 
(4)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on July 15, 2009
 
(5)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on May 7, 2009

3


Table of Contents

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  NRG ENERGY, INC.
(Registrant)
 
 
  /s/ JAMES J. INGOLDSBY    
  James J. Ingoldsby   
Date: August 25, 2009  Chief Accounting Officer
(Principal Accounting Officer)
 
 
 

4


Table of Contents

EXHIBIT INDEX
     
Exhibits    
4.1
  Sixteenth Supplemental Indenture, dated April 28, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiary named therein and Law Debenture Trust Company of New York. (1)
 
   
4.2
  Seventeenth Supplemental Indenture, dated April 28, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiary named therein and Law Debenture Trust Company of New York. (1)
 
   
4.3
  Eighteenth Supplemental Indenture, dated April 28, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiary named therein and Law Debenture Trust Company of New York. (1)
 
   
4.4
  Nineteenth Supplemental Indenture, dated May 8, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiaries named therein and Law Debenture Trust Company of New York.(2)
 
   
4.5
  Twentieth Supplemental Indenture, dated May 8, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiaries named therein and Law Debenture Trust Company of New York.(2)
 
   
4.6
  Twenty-First Supplemental Indenture, dated May 8, 2009, among NRG Energy, Inc., the existing guarantors named therein, the guaranteeing subsidiaries named therein and Law Debenture Trust Company of New York.(2)
 
   
4.7
  Twenty-Second Supplemental Indenture, dated June 5, 2009, among NRG Energy, Inc., the guarantors named therein and Law Debenture Trust Company of New York.(3)
 
   
4.8
  Twenty-Third Supplemental Indenture, dated July 14, 2009, among NRG Energy, Inc., the guarantors named therein and Law Debenture Trust Company of New York.(4)
 
   
10.1A
  Amended and Restated Credit Sleeve and Reimbursement Agreement, dated May 1, 2009, among Reliant Energy Power Supply, LLC, RERH Holdings, LLC, Reliant Energy Retail Holdings, LLC, Reliant Energy Retail Services, LLC, RE Retail Receivables, LLC, Merrill Lynch Commodities, Inc. and Merrill Lynch & Co., Inc. (5)
 
   
10.1B
  Schedules and Exhibits to the Amended and Restated Credit Sleeve and Reimbursement Agreement, dated May 1, 2009 (Portions of this Exhibit have been omitted pursuant to a request for confidential treatment). (5)
 
   
10.2
  Contingent Contribution Agreement, dated May 1, 2009, among NRG Energy, Inc., NRG Retail LLC, RERH Holdings, LLC, Reliant Energy Retail Holdings, LLC and Merrill Lynch Commodities, Inc. (5)
 
   
31.1*
  Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
31.2*
  Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
31.3*
  Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
   
32*
  Certification of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
 
   
101.INS
  XBRL Instance Document
 
   
101.SCH
  XBRL Taxonomy Extension Schema
 
   
101.CAL
  XBRL Taxonomy Extension Calculation Linkbase
 
   
101.DEF
  XBRL Taxonomy Extension Definition Linkbase
 
   
101.LAB
  XBRL Taxonomy Extension Label Linkbase
 
   
101.PRE
  XBRL Taxonomy Extension Presentation Linkbase
 
*   previously filed with Form 10-Q on July 30, 2009
 
(1)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on May 4, 2009
 
(2)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on May 14, 2009

5


Table of Contents

(3)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on June 5, 2009
 
(4)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on July 15, 2009
 
(5)   Incorporated herein by reference to NRG Energy, Inc’s current report on Form 8-K filed on May 7, 2009

6

EX-101.INS 2 nrg-20090630.xml EX-101 INSTANCE DOCUMENT 0001013871 2008-01-01 2008-03-31 0001013871 2007-12-31 0001013871 2009-04-01 2009-06-30 0001013871 2008-04-01 2008-06-30 0001013871 2008-01-01 2008-06-30 0001013871 2009-06-30 0001013871 2008-12-31 0001013871 2008-06-30 0001013871 2009-07-28 0001013871 2009-01-01 2009-06-30 iso4217:USD xbrli:shares xbrli:shares iso4217:USD <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 1 - us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <!-- xbrl,ns --> <div align="center" style="font-size: 10pt; margin-top: 0pt"><b> </b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>Note 1 &#8212; Basis of Presentation</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG Energy, Inc., or NRG or the Company, is primarily a wholesale power generation company with a significant presence in major competitive power markets in the United States, as well as a major retail electricity franchise in the ERCOT (Texas) market. NRG is engaged in the ownership, development, construction and operation of power generation facilities, the transacting in and trading of fuel and transportation services, the trading of energy, capacity and related products in the United States and select international markets, and supply of electricity and energy services to retail electricity customers in the Texas market. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the SEC&#8217;s regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company&#8217;s financial statements in its Annual Report on Form 10-K for the year ended December&#160;31, 2008. Interim results are not necessarily indicative of results for a full year. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company&#8217;s consolidated financial position as of June&#160;30, 2009, the results of operations for the three and six months ended June&#160;30, 2009 and 2008, and cash flows for the six months ended June&#160;30, 2009 and 2008. These financial statements and notes reflect the Company&#8217;s evaluation of events occurring subsequent to the balance sheet date through July&#160;30, 2009, the date the financial statements were issued. Certain prior-year amounts have been reclassified for comparative purposes. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Use of Estimates</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during the reporting period. Actual results could be different from these estimates. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Cash and Cash Equivalents</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Cash and cash equivalents at June&#160;30, 2009, are predominantly held in money market funds invested in treasury securities, treasury repurchase agreements or government agency debt. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Other Cash Flow Information</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG&#8217;s non-cash investing activities for the six months ended June&#160;30, 2009 included capital expenditures of $46&#160;million for which the associated liability is reflected within accrued expenses. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Recent Accounting Developments</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<i>SFAS 141R </i>&#8212; The Company adopted SFAS No.&#160;141 (revised 2007), <i>Business Combinations</i>, or SFAS 141R, on January&#160;1, 2009. The provisions of SFAS 141R are applied prospectively to business combinations for which the acquisition date occurs after January&#160;1, 2009. The statement requires an acquirer to recognize and measure in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at fair value at the acquisition date. It also recognizes and measures the goodwill acquired or a gain from a bargain purchase in the business combination and determines what information to disclose to enable users of an entity&#8217;s financial statements to evaluate the nature and financial effects of the business combination. In addition, transaction costs are required to be expensed as incurred. As discussed in Note 3, <i>Business Acquisition</i>, on May&#160;1, 2009 NRG acquired all of the Texas electric retail business operations, or Reliant Energy, of Reliant Energy, Inc., now known as RRI Energy, Inc., or RRI. The Company has applied the provisions of SFAS 141R to the Reliant Energy acquisition. As discussed further in Note 12, <i>Income Taxes</i>, any reductions after January&#160;1, 2009, to existing net deferred tax assets or valuation allowances or changes to uncertain tax benefits, as they relate to Fresh Start or previously completed acquisitions, will be recorded to income tax expense rather than additional paid-in capital or goodwill. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<i>FSP FAS 141R-1 </i>&#8212; In April&#160;2009, the FASB issued FSP No.&#160;FAS 141(R)-1, <i>Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies</i>, or FSP FAS 141R-1, which the Company adopted effective January&#160;1, 2009. This FSP amends and clarifies SFAS 141R<i>, </i>to address application issues on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. The provisions of FSP FAS 141R-1 are applied prospectively to assets or liabilities arising from contingencies in business combinations for which the acquisition date occurs after January&#160;1, 2009. Accordingly, the Company has applied the provisions of FSP FAS 141R-1 to the Reliant Energy acquisition. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<i>SFAS 160 </i>&#8212; The Company adopted SFAS No.&#160;160, <i>Noncontrolling Interests in Consolidated Financial Statements&#8212;an amendment of ARB No.&#160;51, Consolidated Financial Statements</i>, or SFAS 160, on January&#160;1, 2009. 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Accordingly, the Company has conformed its financial statement presentation and disclosures to the requirements of SFAS 160. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<i>FSP APB 14-1 </i>&#8212; The Company adopted FSP No.&#160;APB 14-1, <i>Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement), </i>or FSP APB 14-1, on January&#160;1, 2009, applying it retrospectively to all periods presented<i>. </i>FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) do not fall within the scope of paragraph 12 of Accounting Principles Board Opinion No.&#160;14, <i>Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants,</i> and specifies that issuers of such instruments should separately account for the liability component and the equity component represented by the embedded conversion option in a manner that will reflect the entity&#8217;s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. Upon settlement, the entity shall allocate consideration transferred and transaction costs incurred to the extinguishment of the liability component and the reacquisition of the equity component. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;During the third quarter 2006, NRG&#8217;s unrestricted wholly-owned subsidiaries CSF I and CSF II issued notes and preferred interests, or CSF Debt, which included an embedded derivative requiring NRG to pay to Credit Suisse Group, or CS, at maturity, either in cash or stock at NRG&#8217;s option, the excess of NRG&#8217;s then current stock price over a threshold price. The CSF Debt and its embedded derivative are accounted for under the guidance in FSP APB 14-1. The fair value of the embedded derivative at the date of issuance was determined to be $32&#160;million and has been recorded as a debt discount to the CSF Debt, with a corresponding credit to Additional Paid-in Capital. This debt discount will be amortized over the terms of the underlying CSF Debt. 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margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On May&#160;1, 2009, NRG, through its wholly owned subsidiary NRG Retail LLC, acquired Reliant Energy, which consisted of all of the Texas electric retail business operations of RRI, including the exclusive use of the trade name &#8220;Reliant&#8221;. Reliant Energy arranges for the transmission and delivery of electricity to customers, bills customers, collects payments for electricity sold and maintains call centers to provide customer service. Reliant Energy is the second largest electricity provider to residential and small business, or mass, customers in Texas, with approximately 1.6&#160;million mass customers as of June&#160;30, 2009. Reliant Energy also sells electricity and energy services to commercial, industrial and governmental/institutional customers, or C&#038;I customers, in Texas with 0.1 million C&#038;I customers based on metered locations as of June&#160;30, 2009. These customers include refineries, chemical plants, manufacturing facilities, hospitals, universities, government agencies, restaurants, and other facilities. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;With its complementary generation portfolio, the Texas region will be a supplier of power to Reliant Energy, thereby creating the potential for a more stable, reliable and competitive business that benefits Texas consumers. By backing Reliant Energy&#8217;s load-serving requirements with NRG&#8217;s generation and risk management practices, the need to sell and buy power from other financial institutions and intermediaries that trade in the ERCOT market may be reduced, resulting in reduced transaction costs and credit exposures, which will provide for an efficient credit structure. This will also allow for a reduction in actual and contingent collateral, which will be achieved initially through offsetting transactions and over time by reducing the need to hedge the retail power supply through third parties, thus reducing collateral postings. In addition, with Reliant Energy&#8217;s base of retail customers, NRG now has a platform to build on the entire class of distributed generation and retail alternative energy technologies. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Credit Support</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On May&#160;1, 2009, NRG arranged with Merrill Lynch Commodities, Inc. and certain of its affiliates, or Merrill Lynch, the former credit provider of RRI, to provide continuing credit support to Reliant Energy after closing the acquisition. In connection with entering into a transitional credit sleeve facility, or CSRA, NRG contributed $200&#160;million of cash to Reliant Energy. In conjunction with the CSRA, NRG, Reliant Energy, counterparties, and Merrill Lynch novated some of NRG&#8217;s in-the-money trades to move collateral from NRG to Merrill Lynch, thereby reducing Merrill Lynch&#8217;s actual and contingent collateral supporting Reliant Energy out-of-money positions. As a result, $522&#160;million of cash collateral held by NRG was moved to Merrill Lynch on the novation dates. NRG continues to record unrealized and realized gains/losses for these novated trades in its Texas and Northeast segments. The CSRA is scheduled to provide collateral support for Reliant Energy until November&#160;1, 2010. NRG will also have two potential additional cash contribution obligations: (i)&#160;in October&#160;2009 of $250&#160;million if the actual collateral posted by Merrill Lynch exceeded the predetermined threshold as set forth in the CSRA; and (ii)&#160;in October 2010 for up to $400&#160;million at the scheduled sleeve unwind. The monthly fee for the CSRA is 5.875% on an annualized basis of the predetermined exposure. As a result of the CSRA, NRG has significant credit risk with Merrill Lynch. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Additionally, on May&#160;1, 2009, NRG entered into a $50&#160;million working capital facility with Merrill Lynch in connection with the acquisition of Reliant Energy. The facility requires that the Company comply with all terms of the CSRA. The maturity date is November&#160;1, 2010, and NRG initially drew $25&#160;million under the facility. 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Accordingly, NRG has conducted a preliminary assessment of net assets acquired and has recognized provisional amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, which are preliminary at June 30, 2009, while transaction and integration costs associated with the acquisition are expensed as incurred. The initial accounting for the business combination is not complete because the appraisals necessary to assess the fair values of the net assets acquired and the amount of goodwill (if any) to be recognized are still in process, and the Company is also in the process of valuing the tax basis of the net assets acquired, which will affect the deferred tax balances. The provisional amounts recognized are subject to revision as more detailed analyses are completed and additional information is obtained about the facts and circumstances that existed as of the acquisition date. Any changes to the fair value assessments and the tax basis values will affect the final balance of goodwill. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG paid RRI $287.5&#160;million in cash at closing, funded from NRG&#8217;s cash on hand, and will remit approximately $82&#160;million of acquired net working capital to RRI over the eight months following the closing, bringing cash consideration to approximately $370&#160;million. On June&#160;15, 2009, NRG paid $63&#160;million to RRI as an initial remittance of acquired net working capital. NRG also recognized a $31&#160;million non-cash gain on the settlement of a pre-existing relationship, representing the in-the-money value to NRG of an agreement that permits Reliant Energy to call on certain NRG gas plants when necessary for Reliant Energy to meet its load obligations. NRG has recorded this gain within &#8220;Operating Revenues&#8221; in its condensed consolidated statement of operations. 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The above/below market cash flows were estimated by comparing the expected cash flows to be generated based on existing contracted prices and expected volumes with the cash flows from estimated current market contract prices for the same expected volumes. The estimated current market contract prices were derived considering current market costs, such as price of energy, transmission and distribution costs, and miscellaneous fees, plus a normal profit margin. 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The pro forma data has also been adjusted to eliminate the non-recurring transaction costs incurred by NRG. Transactions between NRG and Reliant Energy have not been eliminated. The pro forma results are presented for illustrative purposes only and do not reflect the realization of potential cost savings, or any related integration costs. Certain cost savings may result from the acquisition; however, there can be no assurance that these cost savings will be achieved. 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margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Realized and unrealized gains and losses included in earnings that are related to the energy derivatives are recorded in operating revenues and cost of operations. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In determining the fair value of NRG&#8217;s Level 2 and 3 derivative contracts, NRG applies a credit reserve to reflect credit risk which is calculated based on credit default swaps. As of June&#160;30, 2009, the credit reserve resulted in a $23&#160;million increase in fair value which is composed of a $1&#160;million loss in OCI and a $24&#160;million gain in operating revenue and cost of operations. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;This footnote should be read in conjunction with the complete description under Note 4, <i>Fair Value of Financial Instruments</i>, to the Company&#8217;s financial statements in its 2008 Annual Report on Form 10-K. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 6 - nrg:AccountingForDerivativeInstrumentsAndHedgingActivitiesTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 12pt"><b>Note 6 &#8212; Accounting for Derivative Instruments and Hedging Activities</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;SFAS 133 requires NRG to recognize all derivative instruments on the balance sheet as either assets or liabilities and to measure them at fair value each reporting period unless they qualify for a Normal Purchase Normal Sale, or NPNS, exception. If certain conditions are met, NRG may be able to designate certain derivatives as cash flow hedges and defer the effective portion of the change in fair value of the derivatives to other comprehensive income, or OCI, until the hedged transactions occur and are recognized in earnings. The ineffective portion of a cash flow hedge is immediately recognized in earnings. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;For derivatives designated as hedges of the fair value of assets or liabilities, the changes in fair value of both the derivative and the hedged transaction are recorded in current earnings. The ineffective portion of a hedging derivative instrument&#8217;s change in fair value is immediately recognized into earnings. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;For derivatives that are not designated as cash flow hedges or do not qualify for hedge accounting treatment, the changes in the fair value will be immediately recognized in earnings. Under the guidelines established per SFAS 133, certain derivative instruments may qualify for the NPNS exception and are therefore exempt from fair value accounting treatment. SFAS 133 applies to NRG&#8217;s energy related commodity contracts, interest rate swaps, and foreign exchange contracts. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;As the Company engages principally in the trading and marketing of its generation assets and retail business, some of NRG&#8217;s commercial activities qualify for hedge accounting under the requirements of SFAS 133. In order for the generation assets to qualify, the physical generation and sale of electricity should be highly probable at inception of the trade and throughout the period it is held, as is the case with the Company&#8217;s baseload plants. For this reason, many trades in support of NRG&#8217;s baseload units normally qualify for NPNS or cash flow hedge accounting treatment, and trades in support of NRG&#8217;s peaking units will generally not qualify for hedge accounting treatment, with any changes in fair value likely to be reflected on a mark-to-market basis in the statement of operations. Most of the retail load contracts either qualify for the NPNS exception or fail to meet the criteria for a derivative and the majority of the supply contracts are recorded under mark-to-market accounting. 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Shares issued and treasury shares repurchased during the year are weighted for the portion of the year that they were outstanding. The 12,000,000 shares outstanding under the Share Lending Agreements with CS affiliates are not treated as outstanding for earnings per share purposes because the CS affiliates must return all borrowed shares (or identical shares) upon termination of the Agreements. See Note 7 &#8211; <i>Long-Term Debt, </i>for more information on the Share Lending Agreements. 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In addition, NRG&#8217;s natural gas purchase commitments decreased by approximately $162&#160;million during the six months ended June&#160;30, 2009, as the 2009&#160;monthly commitments were settled and average natural gas prices decreased. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<b><i>Purchased Power Commitments</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;As a result of the acquisition of Reliant Energy, NRG is party to purchased power contracts of various quantities and durations that are not classified as derivative assets and liabilities. These contracts are not included in the consolidated balance sheet as of June&#160;30, 2009. 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text-align: left"> <tr valign="top" style="font-size: 8pt; color: #000000; background: transparent"> <td width="2%" nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(a)</sup></td> <td width="1%">&#160;</td> <td> <div style="text-align: justify">As of June&#160;30, 2009, the maximum remaining term under any individual purchased power contract is four years. </div></td> </tr> <tr> <td style="font-size: 3pt">&#160;</td> </tr> <tr valign="top" style="font-size: 8pt; color: #000000; background: transparent"> <td width="2%" nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(b)</sup></td> <td width="1%">&#160;</td> <td> <div style="text-align: justify">For contracts with variable pricing components, estimated prices are based on forward commodity curves as of June&#160;30, 2009. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;<b><i>Other</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;As a result of the acquisition of Reliant Energy, the Company acquired the naming rights, including advertising and other benefits, for a football stadium and other convention and entertainment facilities included in the stadium complex in Houston, Texas. Pursuant to this agreement, the Company is required to pay $10&#160;million per year through 2031. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;See discussion in Note 3, <i>Business Acquisition, </i>regarding the CSRA as a result of the acquisition of Reliant Energy on May&#160;1, 2009. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<b>First and Second Lien Structure</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG has granted first and second liens to certain counterparties on substantially all of the Company&#8217;s assets to reduce the amount of cash collateral and letters of credit that it would otherwise be required to post from time to time to support its obligations under out-of-the-money hedge agreements for forward sales of power or MWh equivalents. The Company&#8217;s lien counterparties may have a claim on NRG&#8217;s assets to the extent market prices exceed the hedged price. As of June 30, 2009 and July&#160;23, 2009, all hedges under the first and second liens were in-the-money on a counterparty aggregate basis. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;<b><i>Repowering</i></b><b>NRG Initiatives</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG has capitalized $32&#160;million through June&#160;30, 2009, for the repowering of its El Segundo generating facility in California. As a result of permitting delays related to on-going Natural Resource Defense Counsel claims, the El Segundo project will not reach its original completion date of June&#160;1, 2011. The Company is contemplating certain PPA modifications including the commercial operations date. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>Contingencies</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Set forth below is a description of the Company&#8217;s material legal proceedings. The Company believes that it has valid defenses to these legal proceedings and intends to defend them vigorously. Pursuant to the requirements of SFAS No.&#160;5, <i>Accounting for Contingencies, </i>or SFAS 5, and related guidance, NRG records reserves for estimated losses from contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. In addition, legal costs are expensed as incurred. Management has assessed each of the following matters based on current information and made a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought, and the probability of success. Unless specified below, the Company is unable to predict the outcome of these legal proceedings or reasonably estimate the scope or amount of any associated costs and potential liabilities. As additional information becomes available, management adjusts its assessment and estimates of such contingencies accordingly. Because litigation is subject to inherent uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of the Company&#8217;s liabilities and contingencies could vary from its currently recorded reserves and such differences could be material. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In addition to the legal proceedings noted below, NRG and its subsidiaries are party to other litigation or legal proceedings arising in the ordinary course of business. In management&#8217;s opinion, the disposition of these ordinary course matters will not materially adversely affect NRG&#8217;s consolidated financial position, results of operations, or cash flows. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;<b><i>Exelon Related Litigation</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;<b>Delaware Chancery Court</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On November&#160;11, 2008, Exelon and its wholly-owned subsidiary Exelon Xchange filed a complaint against NRG and NRG&#8217;s Board of Directors. The complaint alleges, among other things, that NRG&#8217;s Board of Directors failed to give due consideration and to take appropriate action in response to the acquisition proposal announced by Exelon on October&#160;19, 2008, in which Exelon offered to acquire all of the outstanding shares of NRG common stock at an exchange ratio of 0.485 Exelon shares for each NRG common share. On November&#160;14, 2008, NRG and NRG&#8217;s Board of Directors filed a motion to dismiss Exelon&#8217;s complaint on the grounds that it failed to state a claim upon which relief can be granted. On March&#160;16, 2009, prior to responding to the motion to dismiss, Exelon and Exelon Xchange filed an amended complaint. The amended complaint seeks, among other things, declaratory and injunctive relief: (i)&#160;declaring that NRG and its Board of Directors breached its fiduciary duties by summarily rejecting the October&#160;19, 2008 Exelon offer, by resorting to defensive measures to interfere with Exelon&#8217;s tender offer, and by making false and misleading statements to NRG stockholders; (ii)&#160;compelling NRG and its Board of Directors to approve the Exelon tender offer by waiving the application of Section&#160;203 of the Delaware General Corporation Law; (iii)&#160;compelling NRG and its Board of Directors from taking any actions with respect to regulatory authorities that would thwart or interfere with the Exelon tender offer; and (iv) compelling NRG and its Board of Directors to correct any false and misleading statements to NRG stockholders and to disclose all material facts necessary for NRG stockholders to make informed decisions regarding the October&#160;19, 2008 Exelon offer. On April&#160;17, 2009, NRG and NRG&#8217;s Board of Directors filed a partial motion to dismiss the amended complaint asserting that many of the claims are subject to the business judgment rule, are premature, and should be dismissed for failure to state a claim upon which relief can be granted. Briefing on the motion commenced on June&#160;12, 2009, and concluded on July&#160;24, 2009. On July 28, 2009, Exelon, NRG, and NRG&#8217;s Board of Directors collectively filed a Stipulation of Dismissal of Exelon&#8217;s lawsuit, thereby ending the case. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On December&#160;11, 2008, the Louisiana Sheriffs&#8217; Pension &#038; Relief Fund and City of St. Claire Shores Police &#038; Fire Retirement System, on behalf of themselves and all others similarly situated, served a previously filed complaint on NRG and its Board of Directors alleging substantially similar allegations as the Exelon complaint. On December&#160;23, 2008, NRG and NRG&#8217;s Board of Directors filed a motion to dismiss the complaint on the grounds that it failed to state a claim upon which relief can be granted. On March&#160;16, 2009, prior to responding to the motion to dismiss, these plaintiffs filed an amended complaint against only NRG&#8217;s Board of Directors. The amended complaint seeks, among other things, declaratory and injunctive relief: (i)&#160;declaring that it is a proper class action; (ii)&#160;declaring that the NRG Board of Directors breached its fiduciary duties by summarily rejecting the October&#160;19, 2008 Exelon offer and by resorting to defensive measures designed to prevent any potential acquirer from entering into a value-maximizing transaction with NRG; (iii)&#160;compelling NRG&#8217;s Board of Directors to engage in a dialogue with Exelon to more fully understand the October&#160;19, 2008 offer and to determine the potential for any improvement thereon; (iv)&#160;enjoining NRG from proceeding with the acquisition of Reliant Energy&#8217;s retail business; (v) enjoining the NRG&#8217;s Board of Directors from taking any actions designed to block a transaction with Exelon; and (vi)&#160;awarding plaintiffs their costs and fees. On April&#160;17, 2009, the NRG Board of Directors filed a motion to dismiss the amended complaint asserting that it fails to state a claim upon which relief can be granted. Briefing on the motion commenced on June&#160;11, 2009, and will conclude on a date to be determined at a July&#160;31, 2009, hearing. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b>Mercer County, New Jersey Superior Court</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On January&#160;6, 2009, three lawsuits previously filed against NRG and NRG&#8217;s Board of Directors on behalf of individual shareholders and all others similarly situated were consolidated into one case in the Law Division of the Superior Court of Mercer County, New Jersey. On January&#160;21, 2009, the plaintiffs filed an Amended Consolidated Complaint in which they allege a single count of breach of fiduciary duty against NRG&#8217;s Board of Directors and seek injunctive relief: (i)&#160;declaring that the action is a class action and certifying plaintiffs as class plaintiffs and counsel as class counsel; (ii)&#160;declaring that defendants breached their fiduciary duties by summarily rejecting the Exelon offer; (iii)&#160;ordering defendants to negotiate with respect to the Exelon offer or with respect to another transaction to maximize shareholder value; (iv)&#160;ordering defendants to exempt Exelon&#8217;s offer from Section&#160;203 of the Delaware General Corporations Law; (v)&#160;awarding compensatory damages including interest; (vi)&#160;awarding plaintiffs costs and fees; and (vii) granting other relief the Court deems proper. On February&#160;20, 2009, NRG&#8217;s Board of Directors filed a motion to dismiss the amended consolidated complaint for failure to state a claim or, in the alternative, to stay the action in favor of the Delaware Chancery Court proceedings. On March&#160;19, 2009, the plaintiffs filed their response and on April&#160;6, 2009, NRG&#8217;s Board of Directors filed its reply. On April&#160;17, 2009, and again on May&#160;7, 2009, oral argument was held and on June&#160;18, 2009, the court found in favor of NRG&#8217;s Board of Directors and stayed the consolidated lawsuits pending resolution of the purported class-action lawsuit filed in Delaware Chancery court by the Louisiana Sheriffs&#8217; Pension &#038; Relief Fund and City of St. Claire Shores Police &#038; Fire Retirement System. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>California Department of Water Resources</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;This matter concerns, among other contracts and other defendants, the California Department of Water Resources, or CDWR, and its wholesale power contract with subsidiaries of WCP (Generation) Holdings, Inc., or WCP. The case originated with a February&#160;2002 complaint filed by the State of California alleging that many parties, including WCP subsidiaries, overcharged the State of California. For WCP, the alleged overcharges totaled approximately $940&#160;million for 2001 and 2002. The complaint demanded that the Federal Energy Regulatory Commission, or FERC, abrogate the CDWR contract and sought refunds associated with revenues collected under the contract. In 2003, the FERC rejected this complaint, denied rehearing, and the case was appealed to the U.S. Court of Appeals for the Ninth Circuit where oral argument was held on December&#160;8, 2004. On December&#160;19, 2006, the Ninth Circuit decided that in the FERC&#8217;s review of the contracts at issue, the FERC could not rely on the <i>Mobile-Sierra </i>standard presumption of just and reasonable rates, where such contracts were not reviewed by the FERC with full knowledge of the then existing market conditions. WCP and others sought review by the U.S. Supreme Court. WCP&#8217;s appeal was not selected, but instead held by the Supreme Court. In the appeal that was selected by the Supreme Court, on June&#160;26, 2008 the Supreme Court ruled: (i)&#160;that the <i>Mobile-Sierra </i>public interest standard of review applied to contracts made under a seller&#8217;s market-based rate authority; (ii)&#160;that the public interest &#8220;bar&#8221; required to set aside a contract remains a very high one to overcome; and (iii)&#160;that the <i>Mobile-Sierra </i>presumption of contract reasonableness applies when a contract is formed during a period of market dysfunction unless (a)&#160;such market conditions were caused by the illegal actions of one of the parties or (b)&#160;the contract negotiations were tainted by fraud or duress. In this related case, the U.S. Supreme Court affirmed the Ninth Circuit&#8217;s decision agreeing that the case should be remanded to FERC to clarify FERC&#8217;s 2003 reasoning regarding its rejection of the original complaint relating to the financial burdens under the contracts at issue and to alleged market manipulation at the time these contracts were formed. As a result, the U.S. Supreme Court then reversed and remanded the WCP CDWR case to the Ninth Circuit for treatment consistent with its June 26, 2008 decision in the related case. On October&#160;20, 2008, the Ninth Circuit asked the parties in the remanded CDWR case, including WCP and the FERC, whether that Court should answer a question the U.S. Supreme Court did not address in its June&#160;26, 2008, decision; whether the <i>Mobile-Sierra</i> doctrine applies to a third-party that was not a signatory to any of the wholesale power contracts, including the CDWR contract, at issue in that case. Without answering that reserved question, on December&#160;4, 2008, the Ninth Circuit vacated its prior opinion and remanded the WCP CDWR case back to the FERC for proceedings consistent with the U.S. Supreme Court&#8217;s June&#160;26, 2008, decision. On December&#160;15, 2008, WCP and the other seller-defendants filed with FERC a Motion for Order Governing Proceedings on Remand. On January&#160;14, 2009, the Public Utilities Commission of the State of California filed an Answer and Cross Motion for an Order Governing Procedures on Remand, and on January&#160;28, 2009, WCP and the other seller-defendants filed their reply. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;At this time, while NRG cannot predict with certainty whether WCP will be required to make refunds for rates collected under the CDWR contract or estimate the range of any such possible refunds, a reconsideration of the CDWR contract by the FERC with a resulting order mandating significant refunds could have a material adverse impact on NRG&#8217;s financial position, statement of operations, and statement of cash flows. As part of the 2006 acquisition of Dynegy&#8217;s 50% ownership interest in WCP, WCP and NRG assumed responsibility for any risk of loss arising from this case, unless any such loss was deemed to have resulted from certain acts of gross negligence or willful misconduct on the part of Dynegy, in which case any such loss would be shared equally between WCP and Dynegy. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160; On April&#160;27, 2009, the U.S. Supreme Court granted <i>certiorari </i>in an unrelated proceeding involving the <i>Mobile-Sierra </i>doctrine that may affect the standard of review applied to the CDWR contract on remand before the FERC. Specifically, on March&#160;18, 2008, the U.S. Court of Appeals for the DC Circuit rejected the appeals filed by the Attorneys General of the State of Connecticut and Commonwealth of Massachusetts regarding the settlement that established the current New England capacity market. The settlement, filed with FERC on March&#160;7, 2006 provides for interim capacity transition payments for all generators in New England for the period starting December&#160;1, 2006 through May&#160;31, 2010 and for the Forward Capacity Market thereafter. The DC Circuit Court of Appeals rejected all substantive challenges to the settlement, but sustained one procedural argument relating to the applicability of the <i>Mobile-Sierra </i>doctrine to non-settling parties. NRG sought certiorari before the U.S. Supreme Court, which was granted on April&#160;27, 2009, and on July&#160;8, 2009, NRG submitted its brief. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Louisiana Generating, LLC</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On February&#160;11, 2009, the U.S. Department of Justice acting at the request of the U.S. Environmental Protection Agency, or U.S. EPA, commenced a lawsuit against Louisiana Generating, LLC in federal district court in the Middle District of Louisiana alleging violations of the Clean Air Act, or CAA, at the Big Cajun II power plant. This is the same matter for which Notices of Violation, or NOVs, were issued to Louisiana Generating, LLC on February&#160;15, 2005, and on December 8, 2006. Specifically, it is alleged that in the late 1990&#8217;s, several years prior to NRG&#8217;s acquisition of the Big Cajun II power plant from the Cajun Electric bankruptcy and several years prior to the NRG bankruptcy, modifications were made to Big Cajun II Units 1 and 2 by the prior owners without appropriate or adequate permits and without installing and employing the best available control technology, or BACT, to control emissions of nitrogen oxides and/or sulfur dioxides. The relief sought in the complaint includes a request for an injunction to: (i)&#160;preclude the operation of Units 1 and 2 except in accordance with the CAA; (ii)&#160;order the installation of BACT on Units 1 and 2 for each pollutant subject to regulation under the CAA; (iii)&#160;obtain all necessary permits for Units 1 and 2; (iv)&#160;order the surrender of emission allowances or credits; (v)&#160;conduct audits to determine if any additional modifications have been made which would require compliance with the CAA&#8217;s Prevention of Significant Deterioration program; (vi)&#160;award to the Department of Justice its costs in prosecuting this litigation; and (vii)&#160;assess civil penalties of up to $27,500 per day for each CAA violation found to have occurred between January&#160;31, 1997, and March&#160;15, 2004, up to $32,500 for each CAA violation found to have occurred between March&#160;15, 2004, and January&#160;12, 2009, and up to $37,500 for each CAA violation found to have occurred after January 12, 2009. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On April&#160;27, 2009, Louisiana Generating, LLC made several filings. First, it filed an objection in the Cajun Electric Cooperative Power, Inc.&#8217;s bankruptcy proceeding in the U.S. Bankruptcy Court for the Middle District of Louisiana to seek to prevent the bankruptcy from closing. Second, it filed a complaint in the same bankruptcy proceeding in the same court seeking a judgment that: (i)&#160;it did not assume liability from Cajun Electric for any claims or other liabilities under environmental laws with respect to Big Cajun II that arose, or are based on activities that were undertaken, prior to the closing date of the acquisition; (ii)&#160;it is not otherwise the successor to Cajun Electric; and (iii)&#160;Cajun Electric and/or the Bankruptcy Trustee are exclusively liable for the violations alleged in the February&#160;11, 2009 lawsuit to the extent that such claims are determined to have merit. Last, it filed in the federal district court for the Middle District of Louisiana a Motion for an Extension of Time to File Responsive Pleadings arguing that the court should extend the May&#160;11, 2009, deadline to respond to the February&#160;11, 2009 lawsuit until such time as directed by the court following resolution of Louisiana Generating, LLC&#8217;s Motion for Stay of Proceedings Pending Resolution of Certain Bankruptcy Actions filed concurrently with the Motion for an Extension of Time. On May&#160;4, 2009, the Department of Justice filed its opposition to the Motion for Stay. On June&#160;4, 2009, after the recusal of the federal bankruptcy judge in this matter, the federal district court for the Middle District of Louisiana issued an order recommending that another bankruptcy judge be appointed to hear the matter. The decision, by the Chief Judge of the U.S. Court of Appeals for the Fifth Circuit, has yet to be made. On June&#160;8, 2009, the parties filed a joint status report setting forth their views of the case and proposing a trial schedule. On June&#160;18, 2009, Louisiana Generating, LLC filed a motion to bifurcate the Department of Justice lawsuit into separate liability and remedy phases, and on June&#160;30, 2009, the Department of Justice filed its opposition. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Citizens for Clean Power</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On November&#160;6, 2008, Citizens for Clean Power, or CCP, filed a notice of its intent to file a lawsuit under the CAA against Indian River Power, LLC, or IRP, seeking to enforce opacity limitations applicable to units 1, 2, 3, and 4. On January&#160;5, 2009, the Delaware Department of Natural Resources and Environmental Control, or DNREC, filed a lawsuit relating to opacity issues against IRP in the Superior Court in Kent County, Delaware. On January&#160;6, 2009, DNREC and IRP agreed to a consent order resolving the DNREC action in which IRP agreed to pay a $5,000 civil penalty and agreed to purchase for DNREC&#8217;s use an Ultrafine Particle Monitor for approximately $60,000. The consent order was filed with the court on February&#160;6, 2009, and entered by the court on February&#160;13, 2009, thereby precluding CCP&#8217;s ability under the CAA to commence its noticed lawsuit. On February&#160;26, 2009, notwithstanding the entry of the consent order, CCP filed a complaint against IRP, in federal district court in Delaware. The complaint seeks injunctive and declarative relief in addition to civil penalties: (i)&#160;declaring that IRP violated the CAA through 6,304 opacity violations between 2004 and 2008; (ii)&#160;seeking civil penalties of up to $32,500 for each such violation; (iii)&#160;enjoining IRP from violating the CAA; (iv)&#160;ordering IRP to assess and mitigate any environmental injuries caused by its emissions; and (v)&#160;awarding CCP its fees and costs. On March&#160;25, 2009, IRP filed a motion to dismiss the complaint, on April&#160;7, 2009, CCP filed its opposition, and on April&#160;20, 2009, IRP filed its reply. On July&#160;23, 2009, the court dismissed the case thereby ending the matter. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Excess Mitigation Credits</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;From January&#160;2002 to April&#160;2005, CenterPoint Energy applied excess mitigation credits, or EMCs, to its monthly charges to retail electric providers as ordered by the Public Utility Commission of Texas, or PUCT. The PUCT imposed these credits to facilitate the transition to competition in Texas, which had the effect of lowering the retail electric providers&#8217; monthly charges payable to CenterPoint Energy. As indicated in its Petition for Review filed with the Supreme Court of Texas on June&#160;2, 2008, CenterPoint Energy has claimed that the portion of those EMCs credited to Reliant Energy Retail Services, LLC, or RERS, a retail electric provider and NRG subsidiary acquired from RRI, totaled $385&#160;million for RERS&#8217;s &#8220;Price to Beat&#8221; Customers. It is unclear what the actual number may be. &#8220;Price to Beat&#8221; was the rate RERS was required by state law to charge residential and small commercial customers that were transitioned to RERS from the incumbent integrated utility company commencing in 2002. In its original stranded cost case brought before the PUCT on March&#160;31, 2004, CenterPoint Energy sought recovery of all EMCs that were credited to all retail electric providers, including RERS, and the PUCT ordered that relief in its Order on Rehearing in Docket No.&#160;29526, on December&#160;17, 2004. After an appeal to state district court, the court entered a final judgment on August&#160;26, 2005, affirming the PUCT&#8217;s order with regard to EMCs credited to RERS. Various parties filed appeals of that judgment with the Court of Appeals for the Third District of Texas with the first such appeal filed on the same date as the state district court judgment and the last such appeal filed on October&#160;10, 2005. On April&#160;17, 2008, the Court of Appeals for the Third District reversed the lower court&#8217;s decision ruling that CenterPoint Energy&#8217;s stranded cost recovery should exclude only EMCs credited to RERS for its &#8220;Price to Beat&#8221; customers. On June&#160;2, 2008, CenterPoint Energy filed a Petition for Review with the Supreme Court of Texas and on June&#160;19, 2009, the Court agreed to consider the CenterPoint Energy appeal as well as two related petitions for review filed by other entities. Oral argument will occur on October&#160;6, 2009. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In November&#160;2008, CenterPoint Energy and RRI, on behalf of itself and affiliates including RERS, agreed to suspend unexpired deadlines, if any, related to limitations periods that might exist for possible claims against REI and its affiliates if CenterPoint Energy is ultimately not allowed to include in its stranded cost calculation those EMCs previously credited to RERS. Regardless of the outcome of the Texas Supreme Court proceeding, NRG believes that any possible future CenterPoint Energy claim against RERS for EMCs credited to RERS would lack legal merit. No such claim has been filed. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Disputed Claims Reserve</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;As part of NRG&#8217;s plan of reorganization, NRG funded a disputed claims reserve for the satisfaction of certain general unsecured claims that were disputed claims as of the effective date of the plan. Under the terms of the plan, as such claims are resolved, the claimants are paid from the reserve on the same basis as if they had been paid out in the bankruptcy. To the extent the aggregate amount required to be paid on the disputed claims exceeds the amount remaining in the funded claims reserve, NRG will be obligated to provide additional cash and common stock to satisfy the claims. Any excess funds in the disputed claims reserve will be reallocated to the creditor pool for the pro rata benefit of all allowed claims. The contributed common stock and cash in the reserves is held by an escrow agent to complete the distribution and settlement process. Since NRG has surrendered control over the common stock and cash provided to the disputed claims reserve, NRG recognized the issuance of the common stock as of December&#160;6, 2003, and removed the cash amounts from the balance sheet. Similarly, NRG removed the obligations relevant to the claims from the balance sheet when the common stock was issued and cash contributed. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On April&#160;3, 2006, the Company made a supplemental distribution to creditors under the Company&#8217;s Chapter&#160;11 bankruptcy plan, totaling $25&#160;million in cash and 5,082,000 shares of common stock. On December&#160;18, 2008, NRG filed with the U.S. Bankruptcy Court for the Southern District of New York a Closing Report and an Application for Final Decree Closing the Chapter&#160;11 Case for NRG Energy, Inc. et al and on December&#160;29, 2008, the court entered the Final Decree. As of December 21, 2008, the reserve held approximately $9.8&#160;million in cash and 1,282,783 shares of common stock. On December&#160;21, 2008, the Company issued an instruction letter to The Bank of New York Mellon to distribute all remaining cash and stock in the Disputed Claims Reserve to NRG&#8217;s creditors. On January&#160;12, 2009, The Bank of New York Mellon commenced the distribution of all remaining cash and stock in the Disputed Claim Reserve to the Company&#8217;s creditors pursuant to NRG&#8217;s Chapter&#160;11 bankruptcy plan and on July&#160;13, 2009, that distribution was complete. </div> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 15 - nrg:RegulatoryMattersTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 20pt"><b>Note 15 &#8212; Regulatory Matters</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG operates in a highly regulated industry and is subject to regulation by various federal and state agencies. As such, NRG is affected by regulatory developments at both the federal and state levels and in the regions in which NRG operates. In addition, NRG is subject to the market rules, procedures and protocols of the various ISO markets in which NRG participates. These power markets are subject to ongoing legislative and regulatory changes that may impact NRG&#8217;s wholesale and retail businesses. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In addition to the regulatory proceedings noted below, NRG and its subsidiaries are a party to other regulatory proceedings arising in the ordinary course of business or have other regulatory exposure. In management&#8217;s opinion, the disposition of these ordinary course matters will not materially adversely affect NRG&#8217;s consolidated financial position, results of operations, or cash flows. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<i>PJM &#8212; </i>By Order dated March&#160;17, 2009, the U.S. Court of Appeals for the DC Circuit denied the remaining appeals of the FERC orders establishing the RPM capacity market. In February of 2009, the entities representing load interests, including the New Jersey Board of Public Utilities, the District of Columbia Office of the People&#8217;s Counsel, and the Maryland Office of People&#8217;s Counsel, agreed to withdraw their appeals regarding the establishment of the RPM market design. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On June&#160;18, 2009, FERC denied rehearing of its order dated September&#160;19, 2008 dismissing a complaint filed by the Maryland Public Service Commission, together with other load interests, against PJM challenging the results of the RPM transition Base Residual Auctions for installed capacity, held between April&#160;2007 and January&#160;2008. The complaint had sought to replace the auction-determined results for installed capacity for the 2008/2009, 2009/2010, and 2010/2011 delivery years with administratively-determined prices, and thus the auction prices are expected to be realized. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<i>Retail (Replacement Reserve) &#8212; </i>On November&#160;14, 2006, Constellation Energy Commodities Group, or Constellation, filed a complaint with the PUCT alleging that ERCOT misapplied the Replacement Reserve Settlement, or RPRS, Formula contained in the ERCOT protocols from April&#160;10, 2006, through September&#160;27, 2006. Specifically, Constellation disputed approximately $4&#160;million in under-scheduling charges for capacity insufficiency asserting that ERCOT applied the wrong protocol. Reliant Energy Power Supply, or REPS, other market participants, ERCOT, and PUCT Staff opposed Constellation&#8217;s complaint. On January&#160;25, 2008, the PUCT entered an order finding that ERCOT correctly settled the capacity insufficiency charges for the disputed dates in accordance with ERCOT protocols and denied Constellation&#8217;s complaint. On April&#160;9, 2008, Constellation appealed the PUCT order to the Civil District Court of Travis County, Texas and on June&#160;19, 2009, the court issued a judgment reversing the PUCT order, finding that the ERCOT protocols were in irreconcilable conflict with each other. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On July&#160;20, 2009, REPS filed an appeal to the Third Court of Appeals in Travis County, Texas, thereby staying the effect of the trial court&#8217;s decision. If all appeals are unsuccessful, on remand to the PUCT, it would determine the appropriate methodology for giving effect to the trial court&#8217;s decision. It is not known at this time whether only Constellation&#8217;s under-scheduling charges, the under-scheduling charges of all other QSEs that disputed REPS charges for the same time frame, the entire market, or some other approach would be used for any resettlement. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Under the PUCT ordered formula, Qualified Scheduling Entities, or QSEs, who under-scheduled capacity within any of ERCOT&#8217;s four congestion zones were assessed under-scheduling charges which defrayed the costs incurred by ERCOT for RPRS that would otherwise be spread among all load-serving QSEs. Under the Court&#8217;s decision, all RPRS costs would be assigned to all load-serving QSEs based upon their load ratio share without assessing any separate charge to those QSEs who under-scheduled capacity. If under-scheduling charges for capacity insufficient QSEs were not used to defray RPRS costs, REPS&#8217;s share of the total RPRS costs allocated to QSEs would increase. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 16 - us-gaap:EnvironmentalLossContingencyDisclosureTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 12pt"><b>Note 16 &#8212; Environmental Matters</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;The construction and operation of power projects are subject to stringent environmental and safety protection and land use laws and regulation in the U.S. If such laws and regulations become more stringent, or new laws, interpretations or compliance policies apply and NRG&#8217;s facilities are not exempt from coverage, the Company could be required to make modifications to further reduce potential environmental impacts. New legislation and regulations to mitigate the effects of greenhouse gases, or GHGs, including CO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub> from power plants, are under consideration at the federal and state levels. In general, the effect of such future laws or regulations is expected to require the addition of pollution control equipment or the imposition of restrictions or additional costs on the Company&#8217;s operations. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Environmental Capital Expenditures</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Based on current rules, technology and plans, NRG has estimated that environmental capital expenditures to be incurred during the remainder of 2009 through 2013 to meet NRG&#8217;s environmental commitments will be approximately $1.1&#160;billion and are primarily associated with controls on the Company&#8217;s Big Cajun and Indian River facilities. These capital expenditures, in general, are related to installation of particulate, SO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub>, NO<sub style="font-size: 85%; vertical-align: text-bottom">x</sub>, and mercury controls to comply with federal and state air quality rules and consent orders, as well as installation of &#8220;Best Technology Available&#8221; under the Phase II 316(b) Rule. NRG continues to explore cost effective alternatives that can achieve desired results. This estimate reflects anticipated schedules and controls related to the Clean Air Interstate Rule, or CAIR, Maximum Achievable Control Technology, or MACT, for mercury, and the Phase II 316(b) Rule which are under remand to the U.S. EPA, and, as such, the full impact on the scope and timing of environmental retrofits from any new or revised regulations cannot be determined at this time. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Northeast Region</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG operates electric generating units located in Connecticut, Delaware, Maryland, Massachusetts and New York which are subject to RGGI. These units must surrender one allowance for every U.S. ton of CO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub> emitted with true up for 2009-2011 occurring in 2012. Allowances are partially allocated only in the state of Delaware. In 2008, NRG emitted approximately 12 million tonnes of CO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub> in RGGI states, although 2009 is tracking lower than 2008&#160;year to date. NRG believes that to the extent CO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub> will not be fully reflected in wholesale electricity prices, the direct financial impact on the Company is likely to be negative as costs will be incurred in the course of securing the necessary RGGI allowances and offsets at auction and in the market. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In January&#160;2006, NRG&#8217;s Indian River Operations, Inc. received a letter of informal notification from the DNREC stating that the Company may be a potentially responsible party with respect to a historic captive landfill. On October&#160;1, 2007, NRG signed an agreement with DNREC to investigate the site through the Voluntary Clean-up Program. On February&#160;4, 2008, the DNREC issued findings that no further action is required in relation to surface water and that a previously planned shoreline stabilization project would adequately address shoreline erosion. The landfill itself will require a further Remedial Investigation and Feasibility Study to determine the type and scope of any additional work required. Until the Remedial Investigation and Feasibility Study is completed, the Company is unable to predict the impact of any required remediation. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On May&#160;29, 2008, the DNREC requested that NRG&#8217;s Indian River Operations, Inc. participate in the development and performance of a Natural Resource Damage Assessment, or NRDA, at the Burton Island Old Ash Landfill. NRG is currently working with the DNREC and other trustees to close out the assessment phase. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>South Central Region</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On February&#160;11, 2009, the U.S. Department of Justice acting at the request of the U.S. EPA commenced a lawsuit against Louisiana Generating, LLC in federal district court in the Middle District of Louisiana alleging violations of the CAA at the Big Cajun II power plant. This is the same matter for which NOVs, were issued to Louisiana Generating, LLC on February&#160;15, 2005, and on December&#160;8, 2006. Further discussion on this matter can be found in Note 14 &#8212; Commitments and Contingencies, <i>Louisiana Generating, LLC</i>. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 17 - us-gaap:ScheduleOfGuaranteeObligationsTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 0%"><b>Note 17 &#8212; Guarantees</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG and its subsidiaries enter into various contracts that include indemnification and guarantee provisions as a routine part of the Company&#8217;s business activities. Examples of these contracts include asset purchases and sale agreements, commodity sale and purchase agreements, retail contracts, joint venture agreements, EPC agreements, operation and maintenance agreements, service agreements, settlement agreements, and other types of contractual agreements with vendors and other third parties, as well as affiliates. These contracts generally indemnify the counterparty for tax, environmental liability, litigation and other matters, as well as breaches of representations, warranties and covenants set forth in these agreements. In some cases, NRG&#8217;s maximum potential liability cannot be estimated, since the underlying agreements contain no limits on potential liability. The Company is also obligated with respect to customer deposits associated with Reliant Energy. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;This Note 17 should be read in conjunction with the complete description under Note 25, <i>Guarantees</i>, to the Company&#8217;s financial statements in its Annual Report on Form 10-K for the year ended December&#160;31, 2008. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In connection with the agreement to sell its 50% ownership interest in Mibrag B.V., NRG executed an agreement guaranteeing the performance of its subsidiary Lambique Beheer under the purchase and sale agreement. This agreement indemnifies the buyer for tax, environmental liability and other matters, as well as breaches of representations and warranties and is limited to EUR 206 million. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG signed a guarantee agreement on behalf of its subsidiary NRG Retail, LLC guaranteeing the payment and performance of its obligations under the LLC Membership Interest Purchase Agreement and related agreements with RRI in connection with the purchase of its retail business, including purchase price and acquired net working capital. In accordance with the LLC Membership Interest Purchase Agreement, on May&#160;1, 2009, NRG signed an agreement guaranteeing payments up to $85&#160;million related to the Restated Power Purchase Agreement with FPL Energy Upton Wind II, LLC. NRG has no reason to believe that the Company currently has any material liability relating to such routine indemnification obligations. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> </div> </body> </html> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 18 - nrg:FinancialStatementsOfGuarantorsAndIssuesOfGuaranteedSecuritiesRegisteredOrBeingRegisteredTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 12pt"><b>Note 18 &#8212; Condensed Consolidating Financial Information</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;As of June&#160;30, 2009, the Company had outstanding $1.2&#160;billion of 7.25% Senior Notes due 2014, $2.4&#160;billion of 7.375% Senior Notes due 2016, $1.1&#160;billion of 7.375% Senior Notes due 2017, and $700&#160;million of 8.50% Senior Notes due 2019. These notes are guaranteed by certain of NRG&#8217;s current and future wholly-owned domestic subsidiaries, or guarantor subsidiaries. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Unless otherwise noted below, each of the following guarantor subsidiaries fully and unconditionally guaranteed the Senior Notes as of June&#160;30, 2009: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom"> <td width="45%">&#160;</td> <td width="5%">&#160;</td> <td width="45%">&#160;</td> </tr> <!-- End Table Head --> <!-- Begin Table Body --> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Arthur Kill Power LLC </div></td> <td>&#160;</td> <td align="left" valign="top">NRG Devon Operations Inc.</td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Astoria Gas Turbine Power LLC </div></td> <td>&#160;</td> <td align="left" valign="top">NRG Dunkirk Operations, Inc.</td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Berrians I Gas Turbine Power LLC </div></td> <td>&#160;</td> <td align="left" valign="top">NRG El Segundo Operations Inc.</td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Big Cajun II Unit 4 LLC </div></td> <td>&#160;</td> <td align="left" valign="top">NRG Generation Holdings, Inc.</td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Cabrillo Power I LLC </div></td> <td>&#160;</td> <td align="left" valign="top">NRG Huntley Operations Inc.</td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Cabrillo Power II LLC </div></td> <td>&#160;</td> <td align="left" valign="top">NRG International LLC</td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Chickahominy River Energy Corp. </div></td> <td>&#160;</td> <td align="left" valign="top">NRG Kaufman LLC</td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; 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margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;The non-guarantor subsidiaries include all of NRG&#8217;s foreign subsidiaries and certain domestic subsidiaries. NRG conducts much of its business through and derives much of its income from its subsidiaries. Therefore, the Company&#8217;s ability to make required payments with respect to its indebtedness and other obligations depends on the financial results and condition of its subsidiaries and NRG&#8217;s ability to receive funds from its subsidiaries. Except for NRG Bayou Cove, LLC, which is subject to certain restrictions under the Company&#8217;s Peaker financing agreements, there are no restrictions on the ability of any of the guarantor subsidiaries to transfer funds to NRG. 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margin-top: 18pt"><b>NRG ENERGY, INC. 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margin-top: 18pt"><b>NRG ENERGY, INC. AND SUBSIDIARIES<br /> CONDENSED CONSOLIDATING BALANCE SHEETS<br /> December&#160;31, 2008</b> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom"> <td width="40%">&#160;</td> <td width="5%">&#160;</td> <td width="3%">&#160;</td> <td width="1%">&#160;</td> <td width="3%">&#160;</td> <td width="5%">&#160;</td> <td width="3%">&#160;</td> <td width="1%">&#160;</td> <td width="3%">&#160;</td> <td width="5%">&#160;</td> <td width="3%">&#160;</td> <td width="1%">&#160;</td> <td width="3%">&#160;</td> <td width="5%">&#160;</td> <td width="3%">&#160;</td> <td width="1%">&#160;</td> <td width="3%">&#160;</td> <td width="5%">&#160;</td> <td width="3%">&#160;</td> <td width="1%">&#160;</td> <td width="3%">&#160;</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>Non-</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3">&#160;</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>Guarantor</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>Guarantor</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>NRG Energy,</b></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>Consolidated</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"> <div style="margin-left:8px; text-indent:-8px"><b>(In millions)</b> </div></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>Subsidiaries</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>Subsidiaries</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>Inc.</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>Eliminations</b><sup style="font-size: 85%; vertical-align: text-top"><b> (a)</b></sup></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>Balance</b></td> </tr> <!-- End Table Head --> <!-- Begin Table Body --> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td align="center" colspan="21"> <div style="margin-left:8px; text-indent:-8px"><b>ASSETS</b> </div></td> </tr> <tr valign="bottom"> <td> <div style="margin-left:8px; text-indent:-8px"><b>Current Assets</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Cash and cash equivalents </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">$</td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">159</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">1,337</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">1,494</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Funds deposited by counterparties </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">754</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">754</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Restricted cash </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">7</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">9</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">16</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Accounts receivable, net </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">422</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">42</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">464</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Inventory </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">443</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">12</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">455</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Derivative instruments valuation </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">4,600</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">4,600</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Cash collateral paid in support of energy risk management activities </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">494</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">494</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Prepayments and other current assets </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">130</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">37</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">278</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(230</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">215</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Total current assets </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">6,094</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">259</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">2,369</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(230</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">8,492</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:8px; text-indent:-8px"><b>Net Property, Plant and Equipment</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">10,725</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">791</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">29</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">11,545</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:8px; 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text-indent:-15px">Changes in nuclear decommissioning liability </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">17</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">17</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Changes in derivatives </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">664</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">5</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">669</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Changes in collateral deposits supporting energy risk management activities </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(328</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(328</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Loss on disposal and sale of assets </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">2</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">2</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Gain on sale of discontinued operations </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(270</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(270</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Gain on sale of emission allowances </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(42</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(42</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:45px; text-indent:-15px">Amortization of unearned equity compensation </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">14</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">14</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:45px; text-indent:-15px">Changes in option premium collected </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">99</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">99</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Cash provided by/(used by) changes in other working capital, net of dispositions affects </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">185</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">96</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(534</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(253</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Net Cash Provided by/Used by Operating Activities</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">783</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">122</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(469</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">436</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Cash Flows from Investing Activities</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Intercompany (loans to)/receipts from subsidiaries </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(81</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">444</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(363</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Capital expenditures </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(201</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(204</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(409</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Increase in restricted cash </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(1</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Decrease in notes receivable </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">21</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">21</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Purchases of emission allowances </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from sale of emission allowances </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">61</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">61</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td nowrap="nowrap"> <div style="margin-left:25px; text-indent:-10px">Investment in nuclear decommissioning trust fund securities </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(285</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(285</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from sales of nuclear decommissioning trust fund securities </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">269</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">269</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from sale of discontinued operations and assets, net of cash divested </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(59</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">288</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">229</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from sale of assets </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">14</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">14</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Equity investment in unconsolidated affiliate </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(17</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(17</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Net Cash Provided/Used by Investing Activities</b> </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(227</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(243</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">711</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(363</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(122</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Cash Flows from Financing Activities</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; 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text-align: left"> <tr valign="top" style="font-size: 8pt; color: #000000; background: transparent"> <td width="2%" nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(a)</sup></td> <td width="1%">&#160;</td> <td> <div style="text-align: justify">As of June&#160;30, 2009, the maximum remaining term under any individual purchased power contract is four years. </div></td> </tr> <tr> <td style="font-size: 3pt">&#160;</td> </tr> <tr valign="top" style="font-size: 8pt; color: #000000; background: transparent"> <td width="2%" nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(b)</sup></td> <td width="1%">&#160;</td> <td> <div style="text-align: justify">For contracts with variable pricing components, estimated prices are based on forward commodity curves as of June&#160;30, 2009. </div></td> </tr> </table> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;<b><i>Other</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;As a result of the acquisition of Reliant Energy, the Company acquired the naming rights, including advertising and other benefits, for a football stadium and other convention and entertainment facilities included in the stadium complex in Houston, Texas. Pursuant to this agreement, the Company is required to pay $10&#160;million per year through 2031. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;See discussion in Note 3, <i>Business Acquisition, </i>regarding the CSRA as a result of the acquisition of Reliant Energy on May&#160;1, 2009. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<b>First and Second Lien Structure</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG has granted first and second liens to certain counterparties on substantially all of the Company&#8217;s assets to reduce the amount of cash collateral and letters of credit that it would otherwise be required to post from time to time to support its obligations under out-of-the-money hedge agreements for forward sales of power or MWh equivalents. The Company&#8217;s lien counterparties may have a claim on NRG&#8217;s assets to the extent market prices exceed the hedged price. As of June 30, 2009 and July&#160;23, 2009, all hedges under the first and second liens were in-the-money on a counterparty aggregate basis. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;<b><i>Repowering</i></b><b>NRG Initiatives</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG has capitalized $32&#160;million through June&#160;30, 2009, for the repowering of its El Segundo generating facility in California. As a result of permitting delays related to on-going Natural Resource Defense Counsel claims, the El Segundo project will not reach its original completion date of June&#160;1, 2011. The Company is contemplating certain PPA modifications including the commercial operations date. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>Contingencies</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Set forth below is a description of the Company&#8217;s material legal proceedings. The Company believes that it has valid defenses to these legal proceedings and intends to defend them vigorously. Pursuant to the requirements of SFAS No.&#160;5, <i>Accounting for Contingencies, </i>or SFAS 5, and related guidance, NRG records reserves for estimated losses from contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. In addition, legal costs are expensed as incurred. Management has assessed each of the following matters based on current information and made a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought, and the probability of success. Unless specified below, the Company is unable to predict the outcome of these legal proceedings or reasonably estimate the scope or amount of any associated costs and potential liabilities. As additional information becomes available, management adjusts its assessment and estimates of such contingencies accordingly. Because litigation is subject to inherent uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of the Company&#8217;s liabilities and contingencies could vary from its currently recorded reserves and such differences could be material. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In addition to the legal proceedings noted below, NRG and its subsidiaries are party to other litigation or legal proceedings arising in the ordinary course of business. In management&#8217;s opinion, the disposition of these ordinary course matters will not materially adversely affect NRG&#8217;s consolidated financial position, results of operations, or cash flows. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;<b><i>Exelon Related Litigation</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;<b>Delaware Chancery Court</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On November&#160;11, 2008, Exelon and its wholly-owned subsidiary Exelon Xchange filed a complaint against NRG and NRG&#8217;s Board of Directors. The complaint alleges, among other things, that NRG&#8217;s Board of Directors failed to give due consideration and to take appropriate action in response to the acquisition proposal announced by Exelon on October&#160;19, 2008, in which Exelon offered to acquire all of the outstanding shares of NRG common stock at an exchange ratio of 0.485 Exelon shares for each NRG common share. On November&#160;14, 2008, NRG and NRG&#8217;s Board of Directors filed a motion to dismiss Exelon&#8217;s complaint on the grounds that it failed to state a claim upon which relief can be granted. On March&#160;16, 2009, prior to responding to the motion to dismiss, Exelon and Exelon Xchange filed an amended complaint. The amended complaint seeks, among other things, declaratory and injunctive relief: (i)&#160;declaring that NRG and its Board of Directors breached its fiduciary duties by summarily rejecting the October&#160;19, 2008 Exelon offer, by resorting to defensive measures to interfere with Exelon&#8217;s tender offer, and by making false and misleading statements to NRG stockholders; (ii)&#160;compelling NRG and its Board of Directors to approve the Exelon tender offer by waiving the application of Section&#160;203 of the Delaware General Corporation Law; (iii)&#160;compelling NRG and its Board of Directors from taking any actions with respect to regulatory authorities that would thwart or interfere with the Exelon tender offer; and (iv) compelling NRG and its Board of Directors to correct any false and misleading statements to NRG stockholders and to disclose all material facts necessary for NRG stockholders to make informed decisions regarding the October&#160;19, 2008 Exelon offer. On April&#160;17, 2009, NRG and NRG&#8217;s Board of Directors filed a partial motion to dismiss the amended complaint asserting that many of the claims are subject to the business judgment rule, are premature, and should be dismissed for failure to state a claim upon which relief can be granted. Briefing on the motion commenced on June&#160;12, 2009, and concluded on July&#160;24, 2009. On July 28, 2009, Exelon, NRG, and NRG&#8217;s Board of Directors collectively filed a Stipulation of Dismissal of Exelon&#8217;s lawsuit, thereby ending the case. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On December&#160;11, 2008, the Louisiana Sheriffs&#8217; Pension &#038; Relief Fund and City of St. Claire Shores Police &#038; Fire Retirement System, on behalf of themselves and all others similarly situated, served a previously filed complaint on NRG and its Board of Directors alleging substantially similar allegations as the Exelon complaint. On December&#160;23, 2008, NRG and NRG&#8217;s Board of Directors filed a motion to dismiss the complaint on the grounds that it failed to state a claim upon which relief can be granted. On March&#160;16, 2009, prior to responding to the motion to dismiss, these plaintiffs filed an amended complaint against only NRG&#8217;s Board of Directors. The amended complaint seeks, among other things, declaratory and injunctive relief: (i)&#160;declaring that it is a proper class action; (ii)&#160;declaring that the NRG Board of Directors breached its fiduciary duties by summarily rejecting the October&#160;19, 2008 Exelon offer and by resorting to defensive measures designed to prevent any potential acquirer from entering into a value-maximizing transaction with NRG; (iii)&#160;compelling NRG&#8217;s Board of Directors to engage in a dialogue with Exelon to more fully understand the October&#160;19, 2008 offer and to determine the potential for any improvement thereon; (iv)&#160;enjoining NRG from proceeding with the acquisition of Reliant Energy&#8217;s retail business; (v) enjoining the NRG&#8217;s Board of Directors from taking any actions designed to block a transaction with Exelon; and (vi)&#160;awarding plaintiffs their costs and fees. On April&#160;17, 2009, the NRG Board of Directors filed a motion to dismiss the amended complaint asserting that it fails to state a claim upon which relief can be granted. Briefing on the motion commenced on June&#160;11, 2009, and will conclude on a date to be determined at a July&#160;31, 2009, hearing. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b>Mercer County, New Jersey Superior Court</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On January&#160;6, 2009, three lawsuits previously filed against NRG and NRG&#8217;s Board of Directors on behalf of individual shareholders and all others similarly situated were consolidated into one case in the Law Division of the Superior Court of Mercer County, New Jersey. On January&#160;21, 2009, the plaintiffs filed an Amended Consolidated Complaint in which they allege a single count of breach of fiduciary duty against NRG&#8217;s Board of Directors and seek injunctive relief: (i)&#160;declaring that the action is a class action and certifying plaintiffs as class plaintiffs and counsel as class counsel; (ii)&#160;declaring that defendants breached their fiduciary duties by summarily rejecting the Exelon offer; (iii)&#160;ordering defendants to negotiate with respect to the Exelon offer or with respect to another transaction to maximize shareholder value; (iv)&#160;ordering defendants to exempt Exelon&#8217;s offer from Section&#160;203 of the Delaware General Corporations Law; (v)&#160;awarding compensatory damages including interest; (vi)&#160;awarding plaintiffs costs and fees; and (vii) granting other relief the Court deems proper. On February&#160;20, 2009, NRG&#8217;s Board of Directors filed a motion to dismiss the amended consolidated complaint for failure to state a claim or, in the alternative, to stay the action in favor of the Delaware Chancery Court proceedings. On March&#160;19, 2009, the plaintiffs filed their response and on April&#160;6, 2009, NRG&#8217;s Board of Directors filed its reply. On April&#160;17, 2009, and again on May&#160;7, 2009, oral argument was held and on June&#160;18, 2009, the court found in favor of NRG&#8217;s Board of Directors and stayed the consolidated lawsuits pending resolution of the purported class-action lawsuit filed in Delaware Chancery court by the Louisiana Sheriffs&#8217; Pension &#038; Relief Fund and City of St. Claire Shores Police &#038; Fire Retirement System. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>California Department of Water Resources</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;This matter concerns, among other contracts and other defendants, the California Department of Water Resources, or CDWR, and its wholesale power contract with subsidiaries of WCP (Generation) Holdings, Inc., or WCP. The case originated with a February&#160;2002 complaint filed by the State of California alleging that many parties, including WCP subsidiaries, overcharged the State of California. For WCP, the alleged overcharges totaled approximately $940&#160;million for 2001 and 2002. The complaint demanded that the Federal Energy Regulatory Commission, or FERC, abrogate the CDWR contract and sought refunds associated with revenues collected under the contract. In 2003, the FERC rejected this complaint, denied rehearing, and the case was appealed to the U.S. Court of Appeals for the Ninth Circuit where oral argument was held on December&#160;8, 2004. On December&#160;19, 2006, the Ninth Circuit decided that in the FERC&#8217;s review of the contracts at issue, the FERC could not rely on the <i>Mobile-Sierra </i>standard presumption of just and reasonable rates, where such contracts were not reviewed by the FERC with full knowledge of the then existing market conditions. WCP and others sought review by the U.S. Supreme Court. WCP&#8217;s appeal was not selected, but instead held by the Supreme Court. In the appeal that was selected by the Supreme Court, on June&#160;26, 2008 the Supreme Court ruled: (i)&#160;that the <i>Mobile-Sierra </i>public interest standard of review applied to contracts made under a seller&#8217;s market-based rate authority; (ii)&#160;that the public interest &#8220;bar&#8221; required to set aside a contract remains a very high one to overcome; and (iii)&#160;that the <i>Mobile-Sierra </i>presumption of contract reasonableness applies when a contract is formed during a period of market dysfunction unless (a)&#160;such market conditions were caused by the illegal actions of one of the parties or (b)&#160;the contract negotiations were tainted by fraud or duress. In this related case, the U.S. Supreme Court affirmed the Ninth Circuit&#8217;s decision agreeing that the case should be remanded to FERC to clarify FERC&#8217;s 2003 reasoning regarding its rejection of the original complaint relating to the financial burdens under the contracts at issue and to alleged market manipulation at the time these contracts were formed. As a result, the U.S. Supreme Court then reversed and remanded the WCP CDWR case to the Ninth Circuit for treatment consistent with its June 26, 2008 decision in the related case. On October&#160;20, 2008, the Ninth Circuit asked the parties in the remanded CDWR case, including WCP and the FERC, whether that Court should answer a question the U.S. Supreme Court did not address in its June&#160;26, 2008, decision; whether the <i>Mobile-Sierra</i> doctrine applies to a third-party that was not a signatory to any of the wholesale power contracts, including the CDWR contract, at issue in that case. Without answering that reserved question, on December&#160;4, 2008, the Ninth Circuit vacated its prior opinion and remanded the WCP CDWR case back to the FERC for proceedings consistent with the U.S. Supreme Court&#8217;s June&#160;26, 2008, decision. On December&#160;15, 2008, WCP and the other seller-defendants filed with FERC a Motion for Order Governing Proceedings on Remand. On January&#160;14, 2009, the Public Utilities Commission of the State of California filed an Answer and Cross Motion for an Order Governing Procedures on Remand, and on January&#160;28, 2009, WCP and the other seller-defendants filed their reply. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;At this time, while NRG cannot predict with certainty whether WCP will be required to make refunds for rates collected under the CDWR contract or estimate the range of any such possible refunds, a reconsideration of the CDWR contract by the FERC with a resulting order mandating significant refunds could have a material adverse impact on NRG&#8217;s financial position, statement of operations, and statement of cash flows. As part of the 2006 acquisition of Dynegy&#8217;s 50% ownership interest in WCP, WCP and NRG assumed responsibility for any risk of loss arising from this case, unless any such loss was deemed to have resulted from certain acts of gross negligence or willful misconduct on the part of Dynegy, in which case any such loss would be shared equally between WCP and Dynegy. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160; On April&#160;27, 2009, the U.S. Supreme Court granted <i>certiorari </i>in an unrelated proceeding involving the <i>Mobile-Sierra </i>doctrine that may affect the standard of review applied to the CDWR contract on remand before the FERC. Specifically, on March&#160;18, 2008, the U.S. Court of Appeals for the DC Circuit rejected the appeals filed by the Attorneys General of the State of Connecticut and Commonwealth of Massachusetts regarding the settlement that established the current New England capacity market. The settlement, filed with FERC on March&#160;7, 2006 provides for interim capacity transition payments for all generators in New England for the period starting December&#160;1, 2006 through May&#160;31, 2010 and for the Forward Capacity Market thereafter. The DC Circuit Court of Appeals rejected all substantive challenges to the settlement, but sustained one procedural argument relating to the applicability of the <i>Mobile-Sierra </i>doctrine to non-settling parties. NRG sought certiorari before the U.S. Supreme Court, which was granted on April&#160;27, 2009, and on July&#160;8, 2009, NRG submitted its brief. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Louisiana Generating, LLC</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On February&#160;11, 2009, the U.S. Department of Justice acting at the request of the U.S. Environmental Protection Agency, or U.S. EPA, commenced a lawsuit against Louisiana Generating, LLC in federal district court in the Middle District of Louisiana alleging violations of the Clean Air Act, or CAA, at the Big Cajun II power plant. This is the same matter for which Notices of Violation, or NOVs, were issued to Louisiana Generating, LLC on February&#160;15, 2005, and on December 8, 2006. Specifically, it is alleged that in the late 1990&#8217;s, several years prior to NRG&#8217;s acquisition of the Big Cajun II power plant from the Cajun Electric bankruptcy and several years prior to the NRG bankruptcy, modifications were made to Big Cajun II Units 1 and 2 by the prior owners without appropriate or adequate permits and without installing and employing the best available control technology, or BACT, to control emissions of nitrogen oxides and/or sulfur dioxides. The relief sought in the complaint includes a request for an injunction to: (i)&#160;preclude the operation of Units 1 and 2 except in accordance with the CAA; (ii)&#160;order the installation of BACT on Units 1 and 2 for each pollutant subject to regulation under the CAA; (iii)&#160;obtain all necessary permits for Units 1 and 2; (iv)&#160;order the surrender of emission allowances or credits; (v)&#160;conduct audits to determine if any additional modifications have been made which would require compliance with the CAA&#8217;s Prevention of Significant Deterioration program; (vi)&#160;award to the Department of Justice its costs in prosecuting this litigation; and (vii)&#160;assess civil penalties of up to $27,500 per day for each CAA violation found to have occurred between January&#160;31, 1997, and March&#160;15, 2004, up to $32,500 for each CAA violation found to have occurred between March&#160;15, 2004, and January&#160;12, 2009, and up to $37,500 for each CAA violation found to have occurred after January 12, 2009. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On April&#160;27, 2009, Louisiana Generating, LLC made several filings. First, it filed an objection in the Cajun Electric Cooperative Power, Inc.&#8217;s bankruptcy proceeding in the U.S. Bankruptcy Court for the Middle District of Louisiana to seek to prevent the bankruptcy from closing. Second, it filed a complaint in the same bankruptcy proceeding in the same court seeking a judgment that: (i)&#160;it did not assume liability from Cajun Electric for any claims or other liabilities under environmental laws with respect to Big Cajun II that arose, or are based on activities that were undertaken, prior to the closing date of the acquisition; (ii)&#160;it is not otherwise the successor to Cajun Electric; and (iii)&#160;Cajun Electric and/or the Bankruptcy Trustee are exclusively liable for the violations alleged in the February&#160;11, 2009 lawsuit to the extent that such claims are determined to have merit. Last, it filed in the federal district court for the Middle District of Louisiana a Motion for an Extension of Time to File Responsive Pleadings arguing that the court should extend the May&#160;11, 2009, deadline to respond to the February&#160;11, 2009 lawsuit until such time as directed by the court following resolution of Louisiana Generating, LLC&#8217;s Motion for Stay of Proceedings Pending Resolution of Certain Bankruptcy Actions filed concurrently with the Motion for an Extension of Time. On May&#160;4, 2009, the Department of Justice filed its opposition to the Motion for Stay. On June&#160;4, 2009, after the recusal of the federal bankruptcy judge in this matter, the federal district court for the Middle District of Louisiana issued an order recommending that another bankruptcy judge be appointed to hear the matter. The decision, by the Chief Judge of the U.S. Court of Appeals for the Fifth Circuit, has yet to be made. On June&#160;8, 2009, the parties filed a joint status report setting forth their views of the case and proposing a trial schedule. On June&#160;18, 2009, Louisiana Generating, LLC filed a motion to bifurcate the Department of Justice lawsuit into separate liability and remedy phases, and on June&#160;30, 2009, the Department of Justice filed its opposition. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Citizens for Clean Power</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On November&#160;6, 2008, Citizens for Clean Power, or CCP, filed a notice of its intent to file a lawsuit under the CAA against Indian River Power, LLC, or IRP, seeking to enforce opacity limitations applicable to units 1, 2, 3, and 4. On January&#160;5, 2009, the Delaware Department of Natural Resources and Environmental Control, or DNREC, filed a lawsuit relating to opacity issues against IRP in the Superior Court in Kent County, Delaware. On January&#160;6, 2009, DNREC and IRP agreed to a consent order resolving the DNREC action in which IRP agreed to pay a $5,000 civil penalty and agreed to purchase for DNREC&#8217;s use an Ultrafine Particle Monitor for approximately $60,000. The consent order was filed with the court on February&#160;6, 2009, and entered by the court on February&#160;13, 2009, thereby precluding CCP&#8217;s ability under the CAA to commence its noticed lawsuit. On February&#160;26, 2009, notwithstanding the entry of the consent order, CCP filed a complaint against IRP, in federal district court in Delaware. The complaint seeks injunctive and declarative relief in addition to civil penalties: (i)&#160;declaring that IRP violated the CAA through 6,304 opacity violations between 2004 and 2008; (ii)&#160;seeking civil penalties of up to $32,500 for each such violation; (iii)&#160;enjoining IRP from violating the CAA; (iv)&#160;ordering IRP to assess and mitigate any environmental injuries caused by its emissions; and (v)&#160;awarding CCP its fees and costs. On March&#160;25, 2009, IRP filed a motion to dismiss the complaint, on April&#160;7, 2009, CCP filed its opposition, and on April&#160;20, 2009, IRP filed its reply. On July&#160;23, 2009, the court dismissed the case thereby ending the matter. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Excess Mitigation Credits</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;From January&#160;2002 to April&#160;2005, CenterPoint Energy applied excess mitigation credits, or EMCs, to its monthly charges to retail electric providers as ordered by the Public Utility Commission of Texas, or PUCT. The PUCT imposed these credits to facilitate the transition to competition in Texas, which had the effect of lowering the retail electric providers&#8217; monthly charges payable to CenterPoint Energy. As indicated in its Petition for Review filed with the Supreme Court of Texas on June&#160;2, 2008, CenterPoint Energy has claimed that the portion of those EMCs credited to Reliant Energy Retail Services, LLC, or RERS, a retail electric provider and NRG subsidiary acquired from RRI, totaled $385&#160;million for RERS&#8217;s &#8220;Price to Beat&#8221; Customers. It is unclear what the actual number may be. &#8220;Price to Beat&#8221; was the rate RERS was required by state law to charge residential and small commercial customers that were transitioned to RERS from the incumbent integrated utility company commencing in 2002. In its original stranded cost case brought before the PUCT on March&#160;31, 2004, CenterPoint Energy sought recovery of all EMCs that were credited to all retail electric providers, including RERS, and the PUCT ordered that relief in its Order on Rehearing in Docket No.&#160;29526, on December&#160;17, 2004. After an appeal to state district court, the court entered a final judgment on August&#160;26, 2005, affirming the PUCT&#8217;s order with regard to EMCs credited to RERS. Various parties filed appeals of that judgment with the Court of Appeals for the Third District of Texas with the first such appeal filed on the same date as the state district court judgment and the last such appeal filed on October&#160;10, 2005. On April&#160;17, 2008, the Court of Appeals for the Third District reversed the lower court&#8217;s decision ruling that CenterPoint Energy&#8217;s stranded cost recovery should exclude only EMCs credited to RERS for its &#8220;Price to Beat&#8221; customers. On June&#160;2, 2008, CenterPoint Energy filed a Petition for Review with the Supreme Court of Texas and on June&#160;19, 2009, the Court agreed to consider the CenterPoint Energy appeal as well as two related petitions for review filed by other entities. Oral argument will occur on October&#160;6, 2009. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In November&#160;2008, CenterPoint Energy and RRI, on behalf of itself and affiliates including RERS, agreed to suspend unexpired deadlines, if any, related to limitations periods that might exist for possible claims against REI and its affiliates if CenterPoint Energy is ultimately not allowed to include in its stranded cost calculation those EMCs previously credited to RERS. Regardless of the outcome of the Texas Supreme Court proceeding, NRG believes that any possible future CenterPoint Energy claim against RERS for EMCs credited to RERS would lack legal merit. No such claim has been filed. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Disputed Claims Reserve</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;As part of NRG&#8217;s plan of reorganization, NRG funded a disputed claims reserve for the satisfaction of certain general unsecured claims that were disputed claims as of the effective date of the plan. Under the terms of the plan, as such claims are resolved, the claimants are paid from the reserve on the same basis as if they had been paid out in the bankruptcy. To the extent the aggregate amount required to be paid on the disputed claims exceeds the amount remaining in the funded claims reserve, NRG will be obligated to provide additional cash and common stock to satisfy the claims. Any excess funds in the disputed claims reserve will be reallocated to the creditor pool for the pro rata benefit of all allowed claims. The contributed common stock and cash in the reserves is held by an escrow agent to complete the distribution and settlement process. Since NRG has surrendered control over the common stock and cash provided to the disputed claims reserve, NRG recognized the issuance of the common stock as of December&#160;6, 2003, and removed the cash amounts from the balance sheet. Similarly, NRG removed the obligations relevant to the claims from the balance sheet when the common stock was issued and cash contributed. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On April&#160;3, 2006, the Company made a supplemental distribution to creditors under the Company&#8217;s Chapter&#160;11 bankruptcy plan, totaling $25&#160;million in cash and 5,082,000 shares of common stock. On December&#160;18, 2008, NRG filed with the U.S. Bankruptcy Court for the Southern District of New York a Closing Report and an Application for Final Decree Closing the Chapter&#160;11 Case for NRG Energy, Inc. et al and on December&#160;29, 2008, the court entered the Final Decree. As of December 21, 2008, the reserve held approximately $9.8&#160;million in cash and 1,282,783 shares of common stock. On December&#160;21, 2008, the Company issued an instruction letter to The Bank of New York Mellon to distribute all remaining cash and stock in the Disputed Claims Reserve to NRG&#8217;s creditors. On January&#160;12, 2009, The Bank of New York Mellon commenced the distribution of all remaining cash and stock in the Disputed Claim Reserve to the Company&#8217;s creditors pursuant to NRG&#8217;s Chapter&#160;11 bankruptcy plan and on July&#160;13, 2009, that distribution was complete. </div> </div> </body> </html> <!-- Begin Block Tagged Note 14 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock--> Note 14 &#8212; Commitments and Contingencies false false No definition available. 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margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Realized and unrealized gains and losses included in earnings that are related to the energy derivatives are recorded in operating revenues and cost of operations. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In determining the fair value of NRG&#8217;s Level 2 and 3 derivative contracts, NRG applies a credit reserve to reflect credit risk which is calculated based on credit default swaps. As of June&#160;30, 2009, the credit reserve resulted in a $23&#160;million increase in fair value which is composed of a $1&#160;million loss in OCI and a $24&#160;million gain in operating revenue and cost of operations. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;This footnote should be read in conjunction with the complete description under Note 4, <i>Fair Value of Financial Instruments</i>, to the Company&#8217;s financial statements in its 2008 Annual Report on Form 10-K. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> </div> </body> </html> <!-- Begin Block Tagged Note 5 - nrg:FairValueOfFinancialInstrumentsTextBlock--> Note 5 &#8212; Fair Value of Financial Instruments false false This item represents the complete disclosure regarding the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (4) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary t o understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (5) all other required (as defined) and desired information. 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This will also allow for a reduction in actual and contingent collateral, which will be achieved initially through offsetting transactions and over time by reducing the need to hedge the retail power supply through third parties, thus reducing collateral postings. In addition, with Reliant Energy&#8217;s base of retail customers, NRG now has a platform to build on the entire class of distributed generation and retail alternative energy technologies. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Credit Support</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On May&#160;1, 2009, NRG arranged with Merrill Lynch Commodities, Inc. and certain of its affiliates, or Merrill Lynch, the former credit provider of RRI, to provide continuing credit support to Reliant Energy after closing the acquisition. 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Examples of these contracts include asset purchases and sale agreements, commodity sale and purchase agreements, retail contracts, joint venture agreements, EPC agreements, operation and maintenance agreements, service agreements, settlement agreements, and other types of contractual agreements with vendors and other third parties, as well as affiliates. These contracts generally indemnify the counterparty for tax, environmental liability, litigation and other matters, as well as breaches of representations, warranties and covenants set forth in these agreements. In some cases, NRG&#8217;s maximum potential liability cannot be estimated, since the underlying agreements contain no limits on potential liability. 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The CSF I debt has a maturity date of June&#160;2010 and the CSF II debt has a maturity date of October&#160;2009. Interest expense for the CSF Debt, including the debt discount amortization for the three and six months ended June&#160;30, 2009, was $9&#160;million and $18&#160;million, respectively. Interest expense for the CSF Debt, including the debt discount amortization for the three and six months ended June&#160;30, 2008 was $9&#160;million and $19&#160;million, respectively. The effective interest rate as of June&#160;30, 2009, was 11.4% for the CSF I debt and 12.1% for the CSF II debt. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<b><i>Dunkirk Power LLC Tax-Exempt Bonds </i></b>&#8212; On April&#160;15, 2009, NRG executed a $59&#160;million tax-exempt bond financing through its wholly owned subsidiary, Dunkirk Power LLC. The bonds were issued by the County of Chautauqua Industrial Development Agency and will be used for construction of emission control equipment on the Dunkirk Generating Station in Dunkirk, NY. The bonds initially bear weekly interest based on the Securities Industry and Financial Markets Association, or SIFMA, rate, have a maturity date of April&#160;1, 2042, and are enhanced by a letter of credit under the Company&#8217;s Revolving Credit Facility covering amounts drawn on the facility. The proceeds received through June&#160;30, 2009 were $34&#160;million with the remaining balance being released over time as construction costs are paid. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<b><i>GenConn Energy LLC related financings </i></b>&#8212; On April&#160;27, 2009, a wholly owned subsidiary of NRG closed on an equity bridge loan facility, or EBL, in the amount of $121.5&#160;million from a syndicate of banks. The purpose of the EBL is to fund the Company&#8217;s proportionate share of the project construction costs required to be contributed into GenConn Energy LLC, or GenConn, a 50% equity method investment of the Company. The EBL, which is fully collateralized with a letter of credit issued under the Company&#8217;s Synthetic Letter of Credit Facility covering amounts drawn on the facility, will bear interest at a rate of LIBOR plus 2% on drawn amounts. The EBL will mature on the earlier of the commercial operations date of the Middletown project or July&#160;26, 2011. The EBL also requires mandatory prepayment of the portion of the loan utilized to pay costs of the Devon project, of approximately $56&#160;million, on the earlier of Devon&#8217;s commercial operations date or January&#160;27, 2011. The proceeds of the EBL received through June&#160;30, 2009 were $70&#160;million and the remaining amounts will be drawn as necessary to fund construction costs. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In April&#160;2009, GenConn secured financing for 50% of the Devon and Middletown project construction costs through a 7-year term loan facility, and also entered into a 5-year revolving working capital loan and letter of credit facility, which collectively with the term loan is referred to as the GenConn Facility. 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NRG is engaged in the ownership, development, construction and operation of power generation facilities, the transacting in and trading of fuel and transportation services, the trading of energy, capacity and related products in the United States and select international markets, and supply of electricity and energy services to retail electricity customers in the Texas market. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the SEC&#8217;s regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company&#8217;s financial statements in its Annual Report on Form 10-K for the year ended December&#160;31, 2008. Interim results are not necessarily indicative of results for a full year. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company&#8217;s consolidated financial position as of June&#160;30, 2009, the results of operations for the three and six months ended June&#160;30, 2009 and 2008, and cash flows for the six months ended June&#160;30, 2009 and 2008. 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The Company has applied the provisions of SFAS 141R to the Reliant Energy acquisition. As discussed further in Note 12, <i>Income Taxes</i>, any reductions after January&#160;1, 2009, to existing net deferred tax assets or valuation allowances or changes to uncertain tax benefits, as they relate to Fresh Start or previously completed acquisitions, will be recorded to income tax expense rather than additional paid-in capital or goodwill. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;<i>FSP FAS 141R-1 </i>&#8212; In April&#160;2009, the FASB issued FSP No.&#160;FAS 141(R)-1, <i>Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies</i>, or FSP FAS 141R-1, which the Company adopted effective January&#160;1, 2009. 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margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;The non-guarantor subsidiaries include all of NRG&#8217;s foreign subsidiaries and certain domestic subsidiaries. NRG conducts much of its business through and derives much of its income from its subsidiaries. Therefore, the Company&#8217;s ability to make required payments with respect to its indebtedness and other obligations depends on the financial results and condition of its subsidiaries and NRG&#8217;s ability to receive funds from its subsidiaries. Except for NRG Bayou Cove, LLC, which is subject to certain restrictions under the Company&#8217;s Peaker financing agreements, there are no restrictions on the ability of any of the guarantor subsidiaries to transfer funds to NRG. 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text-align: left"> </table> </div> <div align="center" style="font-size: 10pt; margin-top: 18pt"><b>NRG ENERGY, INC. 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text-indent:-10px">Changes in deferred income taxes and liability for unrecognized tax benefits </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">100</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">14</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">331</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">445</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Changes in nuclear decommissioning liability </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">15</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">15</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Changes in derivatives </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">(198</td> <td>)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(170</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(368</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Changes in collateral deposits supporting energy risk management activities </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">274</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(29</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">245</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Gain on sale of equity method investment </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">(128</td> <td>)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">&#8212;</td> <td nowrap="nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(128</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Gain on sale of assets </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(1</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Gain on sale of emission allowances </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(9</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(9</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Gain recognized on settlement of pre-existing relationship </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(31</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(31</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Amortization of unearned equity compensation </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">13</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">13</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Changes in option premium collected, net of acquisition </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(265</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(5</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(270</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Cash provided by/(used by) changes in other working capital, net of acquisition </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">532</td> <td nowrap="nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">170</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(941</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(239</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Net Cash Provided/(Used) by Operating Activities</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">1,596</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">310</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(524</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(660</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">722</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Cash Flows from Investing Activities</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Intercompany loans to from subsidiaries </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(901</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">160</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">741</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Acquisition of Reliant Energy, net of cash acquired </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">(57</td> <td>)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(288</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(345</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Investment in Reliant Energy </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">200</td> <td nowrap="nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">(200</td> <td>)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">&#8212;</td> <td nowrap="nowrap">&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Capital expenditures </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(263</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(109</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(374</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">(Increase)/decrease in restricted cash, net </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">6</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(9</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(3</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Decrease/(increase) in notes receivable </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(47</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">36</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(11</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Purchases of emission allowances </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(52</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">&#8212;</td> <td nowrap="nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(52</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Proceeds from sale of emission allowances </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">15</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">15</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Investment in nuclear decommissioning trust fund securities </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(172</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(172</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; text-indent:-10px">Proceeds from sales of nuclear decommissioning trust fund securities </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">157</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">157</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:40px; text-indent:-10px">Proceeds from sale of assets, net </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">6</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">6</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:40px; 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text-indent:-8px"><b>Other Assets</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Investment in subsidiaries </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">651</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">11,949</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(12,600</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; 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text-indent:-10px">Nuclear decommissioning trust fund </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">303</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">303</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Derivative instruments valuation </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">870</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">15</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">885</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; 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text-indent:-8px"><b>Total Assets</b> </div></td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">21,791</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">1,969</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">17,653</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">$</td> <td align="right">(16,605</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">24,808</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom"> <td align="center" colspan="21"> <div style="margin-left:8px; text-indent:-8px"><b>LIABILITIES AND STOCKHOLDERS&#8217; EQUITY</b> </div></td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:8px; text-indent:-8px"><b>Current Liabilities</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Current portion of long-term debt and capital leases </div></td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">67</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">235</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">229</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">$</td> <td align="right">(67</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td align="right">&#160;&#160;&#160;&#160;$&#160;&#160;</td> <td align="right">464</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Accounts payable </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(1,302</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">429</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">1,324</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">451</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Derivative instruments valuation </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">3,976</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">3</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">2</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">3,981</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; 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text-indent:-10px">Cash provided by/(used by) changes in other working capital, net of dispositions affects </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">185</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">96</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(534</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(253</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Net Cash Provided by/Used by Operating Activities</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">783</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">122</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(469</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">436</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Cash Flows from Investing Activities</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Intercompany (loans to)/receipts from subsidiaries </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(81</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">444</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(363</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Capital expenditures </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(201</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(204</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(409</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Increase in restricted cash </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(1</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Decrease in notes receivable </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">21</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">21</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Purchases of emission allowances </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from sale of emission allowances </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">61</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">61</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td nowrap="nowrap"> <div style="margin-left:25px; text-indent:-10px">Investment in nuclear decommissioning trust fund securities </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(285</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(285</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from sales of nuclear decommissioning trust fund securities </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">269</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">269</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from sale of discontinued operations and assets, net of cash divested </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(59</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">288</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">229</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from sale of assets </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">14</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">14</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Equity investment in unconsolidated affiliate </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(17</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(17</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Net Cash Provided/Used by Investing Activities</b> </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(227</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(243</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">711</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(363</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(122</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:18px; text-indent:-15px"><b>Cash Flows from Financing Activities</b> </div></td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">(Payments)/proceeds for intercompany loans </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(523</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">79</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">81</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">363</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Receipt/(Payment) from intercompany dividend </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">17</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(17</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Payments for dividends to preferred stockholders </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(28</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(28</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Payment of financing element of acquired derivatives </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(28</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(28</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Payments for treasury stock </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(55</td> <td nowrap="nowrap">)</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">(55</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from issuance of common stock, net of issuance costs </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">8</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">8</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from sale of noncontrolling interest on subsidiary </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">50</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">50</td> <td>&#160;</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:25px; text-indent:-10px">Proceeds from issuance of long term debt </div></td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">10</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">&#8212;</td> <td>&#160;</td> <td>&#160;</td> <td>&#160;</td> <td align="right">10</td> <td>&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:25px; 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No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true XML 25 defnref.xml IDEA: XBRL DOCUMENT No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The net unrealized change in the aggregate value of derivative instruments used in operating activities and included in earnings in the period, including trading securities and risk management instruments. No authoritative reference available. No authoritative reference available. No authoritative reference available. Sum of accrued expenses and other current liabilities. Accrued expenses are the carrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, that are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Other current liabilities are the aggregate carrying amount, as of the balance sheet date, of current liabilities not separately disclosed in the balance sheet due to materiality considerations. Current liabilities are expected to be paid within one year (or the normal operating cycle, if longer). No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Out-of-market contracts, which primarily relate to energy supply contracts, power contracts, gas swaps, and certain coal contracts, where the contracted commodity price was less than the market price for revenue contracts and greater than market for cost contracts as of the acquisition date for contracts acquired in a business combination or the date of emergence from bankruptcy. Both the gas swaps and power contracts are amortized to revenues while the energy supply contracts and coal contracts are amortized to cost of operations over the term of the contracts. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. This item represents the complete disclosure regarding the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (4) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to underst and the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (5) all other required (as defined) and desired information. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The cash inflow or outflow for the receipt of or payment for the financing element of acquired derivatives. An instrument accounted for as a derivative that at its inception includes off-market terms or requires an up-front cash payment or both may contain a financing element. If such a financing elements is present, all cash inflows and outflows associated with the derivative instrument are reported in a manner consistent with financing activities. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The company is a beneficiary of a trust funded through collections from electric utility ratepayers. In the event that the trust funds are ultimately determined to be inadequate to decommission the company's nuclear facility, all additional amounts required to fund the decommissioning obligations may be collected through non-by-passable charges to the ratepayers. Following the completion of the decommissioning, if surplus funds remain in the decommissioning trusts, any excess funds will be refunded to the respective ratepayers. Consequently, the liability represents a liability to ratepayers in the state of Texas related to decommissioning of the company's Texas nuclear facility. This liability is the sum of the nuclear decommission trust fund asset, the nuclear decommissioning retirement obligation asset included within property, plant and equipment, less the nuclear decommissioning reserve. The total carrying value of all assets and liabilities associated with the decommissioning and the tr usts net to zero and none of the activities related to the decommissioning of the STP nuclear facility are recorded in the income statement as ultimately the ratepayers in the state of Texas are liable for decommissioning the facility. No authoritative reference available. Fair values as of the balance sheet date of all assets resulting from contracts that meet the criteria of being accounted for as derivative instruments which are expected to exist longer than one year or beyond the normal operating cycle, if longer. No authoritative reference available. No authoritative reference available. No authoritative reference available. Development costs incurred during the reporting period in support of initiatives to add generating capacity to the company's assets. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Carrying amount as of the balance sheet date of the cash collateral paid to the Company on deposit in support of energy risk management activities and that are expected to be liquidated within one year or the normal operating cycle, if longer. No authoritative reference available. No authoritative reference available. No authoritative reference available. Sum of operating income and other income (expense) before income taxes and after income (loss) from equity method investments. No authoritative reference available. Fair values as of the balance sheet date for all assets resulting from contracts that meet the criteria of being accounted for as derivative instruments and which are expected to be converted into cash or otherwise disposed of within a year or the normal operating cycle, if longer. No authoritative reference available. No authoritative reference available. No authoritative reference available. Sum of the carrying amounts as of the balance sheet date of all assets, except for property, plant and equipment, that are expected to be realized in cash, sold or consumed after one year or beyond the normal operating cycle, if longer. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Sum of other income/(expenses) which includes equity in earnings/(losses) of unconsolidated affiliaties; other (loss)/income, net; and interest expense. No authoritative reference available. No authoritative reference available. No authoritative reference available. Nuclear decommission investments held in trust to pay for the cost of decommissioning a facility at the end of its economic life. Such funds are contributed and owned by the ratepayers but reported by the entity. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Sum prepaid expenses and other current assets. Prepaid expenses are the amounts paid in advance for capitalized costs that will be expensed with the passage of time or the occurrence of a triggering event, and will be charged against earnings within one year or the normal operating cycle, if longer. Other current assets are the aggregate carrying amount, as of the balance sheet date, of current assets not separately disclosed in the balance sheet. Other current assets are expected to be realized or consumed within one year (or the normal operating cycle, if longer). No authoritative reference available. Describes all of the specific regulatory matters that are pending, including the regulatory authorities involved and the potential impacts. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Proceeds from the sales of nuclear decommissioning trust fund securities that are classified as cash flows from investing activities. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Fair values as of the balance sheet date of all liabilities resulting from contracts that meet the criteria of being accounted for as derivative instruments, and which are expected to be extinguished or otherwise disposed of after one year or beyond the normal operating cycle, if longer. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The amount of cash collateral received from hedge counterparties in support of energy risk management activities for which there is an offsetting liability within current liabilities. It is the entity's intention to limit the use of these funds. Depending on market fluctuations and the settlement of the underlying contracts, the Company will refund this collateral to the hedge counterparties pursuant to the terms and conditions of the underlying trades. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The current period expense charged against earnings for the periodic recognition of the entity's ownership in nuclear fuel based on units of production over the estimated useful life. As a noncash (income) expense, this element is added back to net income when calculating cash provided by (used in) operations using the indirect method. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. This element can be used to disclose the entity's entire derivative instruments and hedging activities disclosure as a single block of text. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising there from, and the amounts of and methodologies and assumptions used in determining the amounts of such items. Also includes (1) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the Company is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security and (2) quantitative information about market risks and how such risk is are managed. No authoritative reference available. No authoritative reference available. No authoritative reference available. The net change during the reporting period in the nuclear decommissioning trust liability, representing amounts collected, through rates or other authorized charges to electric utility customers, which are designated for funding the Company's portioning of the decommissioning of its nuclear facilities. Following the completion of the decommissioning, if surplus funds remain in the decommissioning trusts, any excess will be refunded to the respective rate payers. No authoritative reference available. The net change during the reporting period in the value of other assets or liabilities used in operating activities that are not otherwise required to be separately disclosed, net of the impact of acquisitions. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Text block that encapsulates the detailed tables comprising the financial statements (balance sheet, income statement and statement of cash flows) in accordance with SEC Article 3-10 for guarantor and non-guarantor subsidiaries. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Cash outflows from investments in nuclear decommissioning fund securities that are classified as cash flows from investing activities. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Carrying amount as of the balance sheet date of cash collateral received by the Company on deposit from third parties in support of energy risk management activities and that are expected to be paid within one year (or the normal operating cycle, if longer). No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Fair values as of the balance sheet date of all liabilities resulting from contracts that meet the criteria of being accounted for as derivative instruments, and which are expected to be extinguished or otherwise disposed of within a year or the normal operating cycle, if longer. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The aggregate (income) expense recorded in earnings to allocate the cost of out-of-market contract and intangible assets (nonphysical assets not used in production) in a systematic and rational manner to the periods expected to benefit from such assets. As a noncash (income) expense, this element is added back to net income when calculating cash provided by (used in) operations using the indirect method. No authoritative reference available. No authoritative reference available. No authoritative reference available. The net change during the reporting period in option premiums collected, net of the impact of acquisitions. Option premiums reflect the right or obligation to buy or sell an energy-related commodity and are classified in other current liabilities. No authoritative reference available. The (gain) loss resulting from the sale of a discontinued operation. It is not included in income from continuing operations before income taxes in the income statement. This element is a non-cash adjustment to net income when calculating cash provided by operating activities. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. In accordance with SFAS 141R, represents the non-cash gain recognized by an acquirer in a business combination when the business combination in effect has settled a relationship that existed between the acquirer and an acquiree before they contemplated the business combination. No authoritative reference available. No authoritative reference available. No authoritative reference available. The net change during the reporting period of amounts due from note holders for outstanding loans for both amounts due within one year (or one business cycle) and amounts due beyond one year. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The component of income tax expense for the period representing the net change in the entity's deferred tax assets and liabilities pertaining to continuing operations and the change in the reserve for uncertain tax benefits. No authoritative reference available. No authoritative reference available. No authoritative reference available. Changes in cash collateral deposits for contracts supporting energy risk management activities. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. XML 26 R21.xml IDEA: Environmental Matters 1.0.0.3 false Environmental Matters false 1 $ false false Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 0 nrg_EnvironmentalMattersAbstract nrg false na duration string Environmental Matters false false false false false true false false false 1 false false 0 0 false false Environmental Matters false 3 1 us-gaap_EnvironmentalLossContingencyDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 16 - us-gaap:EnvironmentalLossContingencyDisclosureTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 12pt"><b>Note 16 &#8212; Environmental Matters</b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;The construction and operation of power projects are subject to stringent environmental and safety protection and land use laws and regulation in the U.S. If such laws and regulations become more stringent, or new laws, interpretations or compliance policies apply and NRG&#8217;s facilities are not exempt from coverage, the Company could be required to make modifications to further reduce potential environmental impacts. New legislation and regulations to mitigate the effects of greenhouse gases, or GHGs, including CO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub> from power plants, are under consideration at the federal and state levels. In general, the effect of such future laws or regulations is expected to require the addition of pollution control equipment or the imposition of restrictions or additional costs on the Company&#8217;s operations. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Environmental Capital Expenditures</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;Based on current rules, technology and plans, NRG has estimated that environmental capital expenditures to be incurred during the remainder of 2009 through 2013 to meet NRG&#8217;s environmental commitments will be approximately $1.1&#160;billion and are primarily associated with controls on the Company&#8217;s Big Cajun and Indian River facilities. These capital expenditures, in general, are related to installation of particulate, SO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub>, NO<sub style="font-size: 85%; vertical-align: text-bottom">x</sub>, and mercury controls to comply with federal and state air quality rules and consent orders, as well as installation of &#8220;Best Technology Available&#8221; under the Phase II 316(b) Rule. NRG continues to explore cost effective alternatives that can achieve desired results. This estimate reflects anticipated schedules and controls related to the Clean Air Interstate Rule, or CAIR, Maximum Achievable Control Technology, or MACT, for mercury, and the Phase II 316(b) Rule which are under remand to the U.S. EPA, and, as such, the full impact on the scope and timing of environmental retrofits from any new or revised regulations cannot be determined at this time. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>Northeast Region</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;NRG operates electric generating units located in Connecticut, Delaware, Maryland, Massachusetts and New York which are subject to RGGI. These units must surrender one allowance for every U.S. ton of CO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub> emitted with true up for 2009-2011 occurring in 2012. Allowances are partially allocated only in the state of Delaware. In 2008, NRG emitted approximately 12 million tonnes of CO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub> in RGGI states, although 2009 is tracking lower than 2008&#160;year to date. NRG believes that to the extent CO<sub style="font-size: 85%; vertical-align: text-bottom">2</sub> will not be fully reflected in wholesale electricity prices, the direct financial impact on the Company is likely to be negative as costs will be incurred in the course of securing the necessary RGGI allowances and offsets at auction and in the market. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;In January&#160;2006, NRG&#8217;s Indian River Operations, Inc. received a letter of informal notification from the DNREC stating that the Company may be a potentially responsible party with respect to a historic captive landfill. On October&#160;1, 2007, NRG signed an agreement with DNREC to investigate the site through the Voluntary Clean-up Program. On February&#160;4, 2008, the DNREC issued findings that no further action is required in relation to surface water and that a previously planned shoreline stabilization project would adequately address shoreline erosion. The landfill itself will require a further Remedial Investigation and Feasibility Study to determine the type and scope of any additional work required. Until the Remedial Investigation and Feasibility Study is completed, the Company is unable to predict the impact of any required remediation. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On May&#160;29, 2008, the DNREC requested that NRG&#8217;s Indian River Operations, Inc. participate in the development and performance of a Natural Resource Damage Assessment, or NRDA, at the Burton Island Old Ash Landfill. NRG is currently working with the DNREC and other trustees to close out the assessment phase. </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 1%"><b><i>South Central Region</i></b> </div> <div align="justify" style="font-size: 10pt; margin-top: 10pt">&#160;&#160;&#160;&#160;&#160;On February&#160;11, 2009, the U.S. Department of Justice acting at the request of the U.S. EPA commenced a lawsuit against Louisiana Generating, LLC in federal district court in the Middle District of Louisiana alleging violations of the CAA at the Big Cajun II power plant. This is the same matter for which NOVs, were issued to Louisiana Generating, LLC on February&#160;15, 2005, and on December&#160;8, 2006. 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No authoritative reference available. true 29 3 us-gaap_NetIncomeLossAvailableToCommonStockholdersBasic us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 426000000 426 false false 2 false true 113000000 113 false false 3 false true 610000000 610 false false 4 false true 148000000 148 false false No definition available. No authoritative reference available. true 30 3 us-gaap_EarningsPerShareAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false 3 false false 0 0 false false 4 false false 0 0 false false No definition available. false 31 4 us-gaap_WeightedAverageNumberOfSharesOutstandingBasic us-gaap true na duration shares No definition available. false false false false false false false false false 1 false true 253000000 253 false false 2 false true 236000000 236 false false 3 false true 245000000 245 false false 4 false true 236000000 236 false false No definition available. No authoritative reference available. false 32 4 us-gaap_IncomeLossFromContinuingOperationsPerBasicShare us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 1.68 1.68 false false 2 true true -0.23 -0.23 false false 3 true true 2.49 2.49 false false 4 true true -0.1 -0.1 false false No definition available. No authoritative reference available. false 33 4 us-gaap_IncomeLossFromDiscontinuedOperationsNetOfTaxPerBasicShare us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 0 0 false false 2 true true 0.71 0.71 false false 3 true true 0 0 false false 4 true true 0.73 0.73 false false No definition available. No authoritative reference available. true 34 4 us-gaap_EarningsPerShareBasic us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 1.68 1.68 false false 2 true true 0.48 0.48 false false 3 true true 2.49 2.49 false false 4 true true 0.63 0.63 false false No definition available. No authoritative reference available. true 35 4 us-gaap_WeightedAverageNumberOfDilutedSharesOutstanding us-gaap true na duration shares No definition available. false false false false false false false false false 1 false true 275000000 275 false false 2 false true 236000000 236 false false 3 false true 275000000 275 false false 4 false true 236000000 236 false false No definition available. No authoritative reference available. false 36 4 us-gaap_IncomeLossFromContinuingOperationsPerDilutedShare us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 1.56 1.56 false false 2 true true -0.23 -0.23 false false 3 true true 2.27 2.27 false false 4 true true -0.1 -0.1 false false No definition available. No authoritative reference available. false 37 4 us-gaap_IncomeLossFromDiscontinuedOperationsNetOfTaxPerDilutedShare us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 0 0 false false 2 true true 0.71 0.71 false false 3 true true 0 0 false false 4 true true 0.73 0.73 false false No definition available. No authoritative reference available. true 38 4 us-gaap_EarningsPerShareDiluted us-gaap true na duration decimal No definition available. false false false false false false false false true 1 true true 1.56 1.56 false false 2 true true 0.48 0.48 false false 3 true true 2.27 2.27 false false 4 true true 0.63 0.63 false false No definition available. No authoritative reference available. true 39 3 nrg_AmountsAttributableToCommonStockholdersAbstract nrg false na duration string Amounts attributable to Common Stockholders false false false false false true false false false 1 false false 0 0 false false 2 false false 0 0 false false 3 false false 0 0 false false 4 false false 0 0 false false Amounts attributable to Common Stockholders false 40 4 us-gaap_IncomeLossFromContinuingOperations us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 433000000 433 false false 2 false true -41000000 -41 false false 3 false true 631000000 631 false false 4 false true 4000000 4 false false No definition available. No authoritative reference available. false 41 4 us-gaap_IncomeLossFromDiscontinuedOperationsNetOfTaxAttributableToReportingEntity us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 false true 0 0 false false 2 false true 168000000 168 false false 3 false true 0 0 false false 4 false true 172000000 172 false false No definition available. No authoritative reference available. false 42 4 us-gaap_NetIncomeLoss us-gaap true credit duration monetary No definition available. false false false false false false false false false 1 true true 433000000 433 false false 2 true true 127000000 127 false false 3 true true 631000000 631 false false 4 true true 176000000 176 false false No definition available. 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No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true XML 33 R17.xml IDEA: Income Taxes 1.0.0.3 false Income Taxes false 1 $ false false Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 0 nrg_IncomeTaxesAbstract nrg false na duration string Income Taxes false false false false false true false false false 1 false false 0 0 false false Income Taxes false 3 1 us-gaap_IncomeTaxDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <html> <head></head> <body> <!-- Begin Block Tagged Note 12 - us-gaap:IncomeTaxDisclosureTextBlock--> <div style="font-family: 'Times New Roman',Times,serif"> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>Note 12 &#8212; Income Taxes</b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt"><b><i>Effective Tax Rate</i></b> </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">&#160;&#160;&#160;&#160;&#160;Income taxes included in continuing operations were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom"> <td width="76%">&#160;</td> <td width="5%">&#160;</td> <td width="3%">&#160;</td> <td width="1%">&#160;</td> <td width="3%">&#160;</td> <td width="5%">&#160;</td> <td width="3%">&#160;</td> <td width="1%">&#160;</td> <td width="3%">&#160;</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>Three months ended June 30,</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><b>(In millions except otherwise noted)</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>2009</b></td> <td>&#160;</td> <td nowrap="nowrap" align="center" colspan="3"><b>2008</b></td> </tr> <!-- End Table Head --> <!-- Begin Table Body --> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 1px solid #000000">&#160;</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Income tax expense (benefit) </div></td> <td>&#160;</td> <td align="right">$</td> <td align="right">150</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" align="right">$</td> <td align="right">(53</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Effective tax rate </div></td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">25.8</td> <td nowrap="nowrap">%</td> <td>&#160;</td> <td nowrap="nowrap" align="right">&#160;</td> <td align="right">56.4</td> <td nowrap="nowrap">%</td> </tr> <tr style="font-size: 1px"> <td colspan="9" align="left" style="border-top: 2px solid #000000">&#160;</td> </tr> <!-- End Table Body --> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">&#160;&#160;&#160;&#160;&#160;For the three months ended June&#160;30, 2009, NRG&#8217;s overall effective tax rate on continuing operations was different than the statutory rate of 35% primarily due to a reduction in the state and local income tax rate as a result of the Reliant Energy acquisition and the sale of the MIBRAG facility. 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