The principle assumptions underlying these projections include:

• RRI's current view of the commodity prices in the United States and Western Europe through the end of 2001

• the regulatory framework affecting RRI's businesses will remain the same through the end of 2001, taking into account any modifications to the framework resulting from legislative or regulatory action that has been taken but not yet implemented

• the generation projects of RRI that are currently under construction will commence commercial operation on schedule

The pro forma EPS amounts reflect the sale of shares of common stock in the RRI initial public offering as if the offering had occurred on January 1, 2001.

*  RRI's P/E multiple for 2002 was calculated by dividing the recent trading price of RRI common stock by an amount equal to the midpoint of RRI's projected 2001 Diluted Pro Forma EPS ($1.65) multiplied by 1.25 (RRI's projected annual growth rate).

The principle assumptions underlying these projections include:

• the regulatory framework affecting Reliant Energy's regulated businesses will remain the same through the end of 2001 (e.g., current rates remain in place), taking into account any modifications to the framework resulting from legislative or regulatory action that has been taken but not yet implemented

• customer growth in the service territories of Reliant Energy's regulated businesses will continue at a rate consistent with historic levels

• the service territories of Reliant Energy's regulated businesses will experience normal weather conditions

• Reliant Energy's current view of interest rates through the end of 2001

• Reliant Energy will complete its currently planned financings and refinancings on acceptable terms

The principle assumptions underlying these projections include:

• the regulatory framework affecting Regco's regulated businesses will remain the same through the end of 2002, taking into account any modifications to the framework resulting from legislative or regulatory action that has been taken but not yet implemented

• the regulated rates for the transmission and distribution utility (i.e., the Wires Company) are similar to the interim rulings in the utility's rate case

• the spin-off of RRI occurs by January 1, 2002

• the opening of the Texas electric market to competition begins on January 1, 2002

• customer growth in the service territories of Regco's regulated businesses will continue at a rate consistent with historic levels

• the service territories of Regco's regulated businesses will experience normal weather conditions

• Reliant Energy's current view of interest rates through the end of 2002

• Regco will complete its currently planned financings and refinancings on acceptable terms

• ERCOT Genco will either issue and sell in an IPO or distribute to Regco's shareholders approximately 19% of ERCOT Genco's common stock by June 30, 2002