(Operator Instructions) Welcome to the Dynegy Incorporated Second Quarter 2009 Financial Results Teleconference. I’d now like to turn the conference over to Norelle Lundy, Vice President of Investor and Public Relations.

Welcome to our call. Before we begin I would like to remind you that today’s presentation includes statements reflecting assumptions, expectations, projections, intentions or beliefs about future events with respect to our business strategy, our proposed transaction with LS Power, our cost savings initiatives, and our 2009 and 2010 estimates. These and other statements not relating strictly to historical or current facts are intended as forward looking statements. Actual results though may vary materially from those expressed or implied in any forward looking statements. For a description of factors that may cause such a variance, I would direct you to the forward looking statements legend contained in today’s news release and in our SEC filings, which are available free of charge through our website at dynegy.com. Also, this presentation contains various non-GAAP measures that are reconciled in the appendix of this presentation. For definition purposes and uses of such non-GAAP measures, please see the Form 8-K filed this morning. With that I will now turn it over to our Chairman, President and CEO, Bruce Williamson.

Good morning and thank you for joining us. With me this morning in New York is Holli Nichols, our Chief Financial Officer who will also be covering several slides as part of our announcements today as well as second quarter earnings. Let’s now turn to the agenda for the call, which is highlighted on slide three for those of you following along online via the webcast. As many of you know, the past 12 months have been challenging for Dynegy, the electricity sector and the US economy as a whole. In response, we’ve spent a significant amount of time considering how to best achieve our overarching fundamentals of financial strength and strategic flexibility without changing the fundamentals themselves or our commitment to operating and commercializing well. To enhance financial strength and strategic flexibility we’re implementing three strategic objectives. First is an agreement to redefine our relationship with our Class B stockholder. In addition to his other benefits this will help us achieve a more streamlined and traditional corporate capital structure as well as a more traditional governance structure. I’ll be covering this in more depth in the next several slides. In addition, we’ve closed a credit agreement amendment and initiated a multi-year cost savings initiative which Holli will cover later this morning. She’ll also then discuss our second quarter highlights and regional results. We’ll end today’s presentation by taking your questions. Please turn to slide five where we’ll begin covering the first of the three strategic objectives. As noted in the news release issued this morning Dynegy has entered into definitive agreements with LS Power, the major economic terms of which are laid out for you in this slide. Let me cover the essential elements of the proposed transaction we actively negotiated with LS Power to position Dynegy for the…

Please turn to slide 13. As Bruce mentioned, the credit agreement represents one of the three strategic objectives we’ve been working on. This amendment, which became effective on August 5th applies to our secured facilities which include our $1.08 billion revolver due in 2012 which is currently un-drawn, and our $850 million letter of credit facility and a $69 million term loan due 2013. Our rationale for seeking temporary covenant relief was to help ensure that we maintain ample liquidity as we manage through weakened markets and economic conditions. In addition, we gained increased flexibility under the agreement allowing us to consider several options as we turn our attention to liability management. In return, our credit agreement participants will receive an increase in pricing. Drawn pricing will increase from Libor plus 150 to Libor plus 375 basis points. Un-drawn pricing will increase from 37.5 basis points to 75 basis points. You can go to the appendix of this presentation to review our new financial ratio requirements for both maintenance and in current tests. Before moving on, I’d like to thank all of our banks and term loan lenders for working with us to enhance our financial strength. We received a level of support in this process that was consistent with the relationships we have built over the years. This is reflective of our commitment to valuing all the participants in our capital structure. Please turn to slide 14. Now I’d like to shift to a third element of today’s announcement. To drive costs out of our business we have launched an aggressive cost savings initiative with anticipated total savings estimated at $400 to $450 million over the next four years. We expect this to be fairly ratable across the four years with tangible benefits expected by January 1. To be…

(Operator Instructions) Your first question comes from Andy Smith – JP Morgan

You alluded to it looked like there was an additional lock up for the remaining 95 million shares that LS will have of Class A. Can you elaborate on the terms of what that is?

The lock up its really less of a lock up and more of a block sale restriction that would say essentially that that remaining 15% effectively of the overall outstanding share number couldn’t be sold in a way that the acquirer would hold more than 15% of the outstanding shares.

So there’s no restriction effectively on them just coming out to market and selling. On the Sandy Creek with the $175 million equity you guys show a net about $850 million in cash from LS Power. Is the way to think about that that there’s $175 million sitting at the construction project that effectively just goes with the project when it’s sold?

I think the way to think about Sandy is, as you know, we have the $275 million posted as collateral that we’ve backed with cash and when we think about how to take that into account here what we will actually receive, LS Power will step in for that full commitment, but effectively there’s a loss on that project of about $100 million.

Looking out, you guys have obviously cleaned a lot up here at the company, addressed a lot of liquidity here going forward which I think certainly people have been worried about looking out at the maturities. You have the cost cutting program and all that in effect. How are you guys thinking about the maturity schedule and the balance sheet, is there kind of a laundry list of things you guys want to tackle on that or has this been the focus here the last few months and now you’re going to take some time and figure out what you’re going to do?

What we don’t want to do is we don’t want to have the $1 billion of cash plus the cash we have on hand we don’t want to just take that and park and it and earn money market rates on it when we’ve got maturities particularly the 2011 and 2012 that are out there. Holli and Carolyn and Rick and the Treasury team will be going hard at work looking how they want to attack an overall liability management program, clearly targeting near term maturities being the 2011 and 2012.

We don’t have a specific plan as we sit here today. We have been a little distracted getting the other things done but that’s exactly where our attention will go so that we’re ready at close to be able to move forward. I think that what will drive our behavior there will be we’ll try to balance three different concepts, one being our liquidity, another being our maturity profile, and the third being our fixed costs. Obviously all of those don’t necessarily work with one another so they’ll be some tension and so finding out the best way to balance that is what we’ll be focused on.

On the question of liquidity and how you’re thinking about that, it sounds like you guys are going to look hard at the balance sheet. Prior to today certainly you guys sort of held on to that, seems like the opinion of, a lot of cash is good, got maturities to deal with. Am I interpreting, obviously your liquidity profile has changed a bit, am I also interpreting sort of your view of where you need to be in the liquidity position given what you see out in the world for the next few years, or is that largely the same?

When you look forward at our debt profile, 2011, 2012 is not that far off any more. What we wanted to do was sort of get out in front of a lot of the refinancings and debt maturities that are going to be coming down the road by a lot of companies over the next couple of years. This enables us to do it. In effect the package of transactions today, it’s not very often that you can do a transaction where you one, improve your liquidity and your financial strength, two, redeem 30% of your common stock outstanding and three not negatively impact your public float. I think its striking a balance here between the redemption of the common stock as well as the $1 billion of cash coming in which can then go to work on the debt side of things so they’re sort of an overall benefit I think to both equity as well as the fixed income side of our investor base.

Your next question comes from Lasan Johong – RBC Capital Markets

It sounds like a great deal but I think you and I both know there are better ways to use the money then to paying down debt. You can’t really tell me seriously that you haven’t thought of anything else. What else are you looking at?

Like I said it’s not a cash transaction, it’s just about bringing in debt; it’s also a reduction in 30% of stock outstanding. We’ve had people talking at us for, Holli and I in particular, for probably two and half years or so talking about doing a stock buy back and bringing some shares in. We’re in effect doing that in a very large scale way, bringing in 30% here today. I think there’s something in here for everybody.

Today more than ever I think the balance sheet is very important and weighs on the minds of many investors. I think while we focus on near term maturities and those sorts of things might sound like we’re doing that for the benefit of bond holders but I think in the end that’s also in the best interest of our equity holders as well to get rid of that overhang of nearing maturities.

As well as the overhang of some fixed costs that are out there. Any debt that we do pay down, when we formulate the plan and move forward with it, that’s in effect you can think of its sort of a de-risking of the position for the equity and its shifting value for those currently held by the debt holder to the equity holder.

Your next question comes from Dan Eggers – Credit Suisse

Can we talk a little bit more about the cost savings targets you guys laid out today by way of where you’re seeing those kind of cuts, its pretty significant relative to the overall cost structure for money?

I’ll go back and forth with Holli on this. When you look at the cost structure on some of the things like on the CapEx side we’ve been talking with a lot of you about trying to find ways to look for 10% or so across things. Some of that comes both in the CapEx as well as the O&M side. You kind of have a choice of how you, the degree of which you look at say your maintenance programs and do you go from not just doing what’s required but you get into preventative maintenance and then ultimately you get into even predictive maintenance. The last of those being things where nothing has gone wrong, nothing is going wrong but you’re sort of statistically predicting that something could go wrong and so you’re out really fixing things long before anything happens. I think in this cost environment and this economic environment we’ve worked hard over the last five or six years improving the reliability, improving the run time of the assets to such a degree that now we can kind of back off a little bit for a couple of years. Maybe move a little bit away from the predictive side, be more just kind of right down the fairway in the preventative side. Do everything that we need to around the plants, maintain the same reliability but clearly trim some costs. An example of that, that Holli touched on in her presentation dealt with the environmental projects. Rather than, they have an in-service requirement date of the first of a given year. Rather than do them in the Spring of the preceding year and have seven or eight months of shake down we’re now well into the consent decree environmental program and we’re comfortable enough with the start ups and how things have gone that we’re going to go ahead and shift those to a fall outage and then you’ll have many two or three months of shake down rather than seven or eight months of shake down time. We think that’s adequate and that’s a better balancing of the benefits and the needs of the environmental projects and the cost that you’re incurring to do it. On the G&A side, obviously there’s just we think we already have one of the lowest G&As in the sector. We are out looking all through that as well on both the non-labor as well as labor. There will be some reductions there around the 10% mark, again, and that seems to be kind of a basic metric that we’re able to go out and shoot for and find ways to hit 10%.

As an example that when you shift say at the Baldwin facility there is working environment, that actually has follow on impact on our operating expense, as an example, chemical costs and the like. A lot of these are inner connected. There are ways also at the operating level by not filling open positions and reducing contractor support, those sorts of things will all lead to the cost savings that we’ve outlined with the CapEx being the $25 to $30 million a year, OpEx $30 to $40 million a year and then G&A being the largest at $40 to $45 million a year.

On liquidity where do you think you guys need to be $3 billion is probably a little rich. What kind of number do you think you need on a long run basis and long is it going to take you to get there?

I think what we’ll focus, and this is maybe a little bit back to Andy’s question as well. As we thought about liquidity now its been a combination of thinking about how do we support our commercial operations and our selling forward as well as thinking about maturities that will be coming due as Bruce alluded to in ’11 and ’12. Obviously if we’re able though a successful liability management program to significantly reduce or eliminate those sorts of near term maturities then our focus on liquidity will be very much tied to just our commercial program. That’s something that will be dependent upon where a commodity price is and looking at the fleet we have going forward. It would certainly be less than where the $3 billion that we’re looking at today.

What kind of credit metrics should we be thinking about for you guys long term if liquidity still take some time for the result. What target ratios are you [inaudible]?

Maybe a good place to go is the amended credit facility. Obviously we built the ratios around the financial covenants and the credit agreement at a level that we think we would want to operate at or above. Clearly not below.

Can you share your thoughts on how you guys picked the plants to sell, how much was you guys, how much was LS and do you think you’ve pruned plants that are strategic to your vision for the company relative to plants that were maybe more ancillary?

When you think about, I’ll start with the peakers. When you think about what we’ve been doing and how we’ve been making money with peakers over the last few years we’ve really been doing it less so, clearly the least has been in run time, and the next least has been in capacity payments. What we’ve essentially been doing is we’ve been selling a peaker or two a year. In many ways this is really just sort of pulling all the peakers together and dealing with them as a package. As I discussed in my prepared remarks, you think back two or three years ago and we had basically all our earnings power concentrated in the base load coal plants in the Midwest we did the transaction, we spread out, picked up a lot of combined cycle capability, the intermediate plants which I think are very well positioned today and going forward and so we’re keeping five of those where we only had one before and basically pruning the peakers down. Of the three combined cycles that are also part of the trade two of them in Arizona have long term contracts on them so they really are not positioned to as much benefit as the economy and markets come back as the rest of the combined cycles. We’ve kept the three that really saw some up performance particularly as Holli highlighted on the call, in the second quarter being Kendall, Ontelaunee and Independence. Then when you think about the Western portfolio it really is Big Moss out there is the big driver in the West. So there’s just a little bit of pruning almost that took place in the Western portfolio. The way we arrive at the list of assets it clearly was a negotiation. Basically pruning off the peakers and only three combined cycles as well as the exit of the Sandy Creek minority stake down in ERCOT, that’s a good package of assets to prune off the portfolio and as I said, really improve the financial strength and then also reduce 30% of our shares outstanding all at the same time. That’s a long winded way of saying it was a long negotiation and we think that the package of assets that is leaving really leaves us still with a very strong well positioned portfolio.

Your next question comes from Lasan Johong – RBC Capital Markets

Great transaction but you and I both know there are better ways to use the money then to pay down debt. Assets prices are 30% to 50% of replacement value. You have to be looking at something. Am I really that dumb that I can’t figure this out?

I don’t know how to answer that question. We never talk about transactions or rumors or anything until deals come about. I’m not going to go down a path like that. I think the way to think about it also is while you look at the asset valuations on a percentage of replacement costs, look at the common stock on a percentage of replacement costs. It’s an opportunity to bring in stock at a huge discount to replacement costs. At the same time a large amount of cash which can then shift value from debt to equity holders by a liability management program. All that improves our financial strength but then also improve our strategic flexibility by getting the company really to be 100% public company for the first time in 25 or so years. As I joked, most companies do their IPOs in one year; it took Dynegy 25 years to do it. That really dramatically simplifies things and I think that enables us to just look out across opportunities on a very consistent basis without potential different interest that could come up. I’m not saying anything about LS; you could say the same thing about when Chevron was an owner and before that all the other large block owners. People come and people go. Now the company’s 100% public, its going to be a much simpler story for people, a much easier story for people to understand and like I said its rare that you get an opportunity to do a transaction where you improve your financial strength and redeem 30% of your shares outstanding and not impact your public float all at the same time.

Would it be fair to say that at the end of the day your interest does not only lie in paying back debt, that there are possible other transactions you could do?

There are always possible things that we could do but what we’re talking to you about here mainly are the things that we think are very much within our control and are here and would benefit us in the near term.

Why the $235 million C&O to LS Power, why not just net out of the gains to cash you’re receiving?

One way to think about it, it allows us to push maturities down the fairway. As one of our objectives I mentioned earlier, in addition to managing our fixed costs and our liquidity is our maturity profile. It gives us an opportunity now to use that cash and potentially look at a near term maturity and that’s essentially just on a net basis you’ve not reduced debt but you’ve pushed it down the field.

It just seems strange if you’re trying to pay down debt that would seem like a most obvious choice. Are you suggesting that Sandy Creek is uneconomic if you have $100 million impairment?

I think it’s a combination of things, obviously pricing in ERCOT you have to look at that and you need to look at the implications of what’s going on in that region. There’s also, there’s a lot of construction risk that still remains around that facility. There is still positive cash flows associated with that facility it’s just when you start to compare that to the equity commitment at this point yes there’s a difference there.

To put it this way, that project was started, the construction was started, or committed to in mid 2007. Prices have fallen quite precipitously since then so it only makes sense that that project is taking a hit in the last two years.

Are you saying that the benefits of the cost reduction program will be ratable by one quarter per year is that how it’s going to work out?

Yes, because if you think about the ranges that we’ve put on each of them. It’s a pretty tight range and so I think for any sort of modeling purposes if you want to take the $400 to $450 million and just break that into four segments and drop that in you’re going to be close.

Cumulatively $450 million by the end of 2012 or 2013?

Yes, 2010-2013.

Your next question comes from Brian Russo - Ladenburg Thalmann

I was wondering if you could just talk a little bit more about the step down in 2010 EBITDA versus 2009 how much of it is attributable to the asset sold versus what you’re seeing in the forward markets. Then can we assume that you’ve hedged at a lower price in 2010 then you have in 2009?

Yes, you can flip to one of the slides in there, slide seven, and it shows the step down. As we covered in my remarks, the adjusted EBITDA was tied to the assets that are call them leaving the house is around $140 million so you could take and step down for that amount off of the portfolio prior to the transaction and then I guess you would just say that the remainder of that is due to lower realized prices. As we highlighted, we currently are around the 90% level in terms of expected generation of volumes already hedged or sold in some manner for 2010.

Are you assuming a similar run time for your remaining peaker and CCGTs in 2010 as what we’ve seen so far in 2009?

There won’t be very much in the way of peakers in 2010 because that’s obviously primarily going over to LS Power but from the CCGT perspective I think that’s correct.

We’re not anticipating at this time a material up tick in run time nor any further degradation. As we’ve highlighted now on the first quarter and the second quarter the gas plants have had a good increase in run time year over year and we’d be basically assuming they’re at about the same level as what they are this year.

The key there will be the spreads associated with that run time.

Your next question comes from Gregg Orrill – Barclays Capital

Regarding the 2010 guidance if you could either break out by region sort of what the Midwest is assumed to contribute and maybe if that’s not possible kind of a proportion by region?

At this time we’re not prepared to do a break out by region because then when we do that we’ll get into all the detailed sort of break down like we do when we do annual guidance, we’d be doing that later this year potentially around the time of the third quarter. I would think in terms of percentages probably not a lot different percentage wise then what it is right now when you consider that one CCGT out of the Northeast, two out of the West and then a whole lot of peakers out of the Midwest. I guess if anything you might see a little bit of a change from maybe the Midwest got a little bigger but I don’t think it’s a material change one way or the other.

Your next question comes from Ameet Thakkar – Deutsche Bank

Are you still pursuing the sale of Plum Point?

Yes we are.

On slide 10 you show the EBITDA that’s going with the assets both on a ’09 and 2010 basis. What causes the big step up, it looks like the EBITDA from the assets that you’re selling to LS doubles in 2010 versus 2009?

There are many things actually. On Arlington Valley though there’s a new contract that kicks in, a long term contract there. That’s probably a third of that number. Then the balance of it is split pretty evenly between all the facilities that are going. That’s primarily due to the capacity contract off of those facilities as you know, through the difference auctions that was ratcheting up over time and that’s reflected in that $140 million 2010.

You obviously have given us implied EBITDA multiples based upon what you’re selling, what you announced this morning. Can you give us a sense for on a dollar per KW basis how you guys looked at the values for the peaking, CCGTs under this transaction?

Holli’s got some numbers on that, I’m going to let her answer your question.

The way we looked at it is more of a portfolio and if you do the math you’re going to be somewhere in the $250 to $260 per KW range on this set of assets. The way we thought about that is you need to look at that in context, as an example the shares that we’re getting back in as well. When you look at how our portfolio is valued on a dollars per KW basis we feel like the price effectively we’ll realize for the sale of these assets is greater then the implied dollars per KW and our stock price.

Could you remind us what that number is on your stock price based on Friday’s close?

$2.00 round figures. Basically I think what we’re trying to say is you’ve got to look at a lot of this on a relative value basis. While the dollars per KW on the asset may seem light, the same implied dollars per KW in the stock price is at that level or lower.

The other thing I would add to that, when you’re trying to compare these numbers keep in mind the portfolio that’s leaving Dynegy is about two third peakers and one third combined cycle and when you think about the remaining Dynegy portfolio base load and peakers and combined cycles that its much more obviously weighted to the base load which should trade at a higher dollars per KW.

Your next question comes from Brian Tedale – Broadpoint Capital

On the amendment can you give a little more color you comments of providing flexibility. Does this allow for a new second lien debt or some other, is there any other comments, anything else that this allows for now that you can comment on?

Probably the largest flexibility we gain just because we’ve always had the ability to issue second lien debt that really wasn’t a change. What is different is our ability now, in the past we were not allowed to pay down debt beyond the maturity of the credit agreement which when you think about the term loan piece that was 2013. What this would allow us to do is that if we were to essentially refinance some of the ’11 and ’12 then we could create a basket and with that basket we could then use cash to retire long term debt beyond the 2013. That’s really just important because it gives us more options to consider when we think about liability management. Not knowing exactly what we would do around the ’11 and ’12 we didn’t want to feel constrained that those are the only bonds that we would have an opportunity to look at as part of our liability management program. So this just gives us a broader spectrum of debt to consider.

With regard to second lien, as she briefly said, we’ve always had that capability, I know there was a trade, I call it a trade publication that published an article about our ability to do second lien when we went out with the amendment. I would just highlight, as Holli said, we’ve always had the ability to do it but we like our capital structure the way it is where the only secured debt that we have is in our bank and term loan facility and our term debt is unsecured. We like that structure, we would intend on keeping that structure.

What’s the size of the basket that you can create now, to pay the longer term debt?

I could be up to the $1 billion. It’s created by pushing out the maturity of the ’11 and ’12.

On the cash, should we look for the cash of this transaction as you’re getting $850 million in, in new cash and actually just a release or a change from restricted cash to unrestricted cash on the $175 million?

In effect that’s correct, in effect LS steps in and takes over our $275 million and that’s in effect a net position, you’re correct.

Your comments in the past about your cost structure have always been that you had a very scalable cost structure that you can add new assets to the portfolio for not a lot of additional costs. After this transaction takes it the other way should we view some of the cost savings that you are looking at implementing now as getting the cost structure down to a smaller portfolio size or how should we view that?

I think its really driven more around just given the US economic environment its really looking everywhere all through your structure to see where you can be smart and maximize the results for any amount of costs that you’re expending. I think it’s really geared more around that. There’s probably a little bit in there that also goes with right sizing around following this transaction but its not the major driver for it and I think we still think that there’s a lot of scalability.

Your next question comes from Raymond Leung - Goldman Sachs

You just made a comment that you would look to refinance the 2011 and 2012 is that what I heard correctly?

No, what you heard is that we have an option to do that so we can go after the ’11 or the ’12 or if we refinance and push the ball down the field with any of those it sort of creates a bit of a springing basket that can then enable us to take cash and go after longer term maturities. I think what you don’t want to do in a liability management program is be stuck where you’ve only got one or two place you can go after things to reduce debt. This then really opens up the fairway across all the possibilities. The overall intent would be, as Holli said, strike a balance between liquidity, fixed costs and the maturity profile.

Can you talk about what’s the right, you’re created a significant amount of liquidity here now, what’s the right liquidity going forward given your new hedging program that you implemented over this past six, nine months.

It’s less than $3 billion, that’s probably the most directional as I can go with it. I don’t mean to be flip with the question but we’re clearly popping the liquidity up by quite a bit and then again it just comes down to a trade off between taking some of that liquidity, putting it to work, potentially on liability management. As I mentioned on one of the earlier questions, we’ve had probably two plus years of people saying we should have taken our liquidity and put it to work. By buying in stock up around the $5.00, $6.00, $7.00, $8.00 area instead we’re bringing in 30% of the shares outstanding here today call it $2.00. We’re addressing a material reduction in shares outstanding which should be constructive for our common stock holder, also improving liquidity at the same time to enable us to have greater flexibility to attack debt reduction. I think, as I said earlier, there’s something in here for everybody.

Any other assets that you view as non-core or is this sort of a clean up everything aside from maybe Plumb Point that’s still on the block.

I think its pretty well a clean up. Obviously any company should always say if somebody offers us more then we think we will earn or expect to earn on a net present value across an asset we should look at selling it. This really I think clarifies and cleans up and prunes the portfolio down as you said with the exception of Plumb Point.

Your last question comes from [Wei Romaldo] – Stone Harbor [Wei Romaldo]: If you use the proceeds from this LS transaction to pay down the ’11 and/or the ’12 that doesn’t open up the basket so you call it under the bank amendment so you couldn’t use additional liquidity if you wanted to buy back other debt?

If your scenario is that we use all cash for the ’11 and ’12 that would be correct then the basket is not created. That concludes today’s call. I’d like to thank all of you again for your time this morning and your interest in Dynegy.

That does conclude today’s conference. You may disconnect.