Welcome to the Dynegy 2009 annual and fourth quarter financial results teleconference. At the request of Dynegy, this conference is being recorded for instant replay purposes. Please note that all lines will be in a listen-only mode until the question and answer portion of today's call. (Operator Instructions) I'd now like to turn the conference over to Ms. Norelle Lundy, Vice President of Investor and Public Relations. Ma'am, you may begin.

Good morning, everyone and welcome to Dynegy's investor conference call and webcast highlighting the company's 2009 annual and fourth quarter results. As is our customary practice before we begin this morning, I would like to remind you that our call will include statements reflecting assumptions, expectations, projections, intentions or beliefs about future events with respect to our business strategy 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 statement. For a description of the factors that may cause such a variance I will 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. With that I will now turn it over to our Chairman, President and CEO, Bruce Williamson.

Thanks, Norelle. Good morning and thank you for joining us. With me this morning are several members of Dynegy's management team including Holli Nichols, our Chief Financial Officer. Let's now turn to the agenda for the call which is highlighted on slide three for those of you who are following along online via the Webcast. I'll begin today with our accomplishments in 2009, a year in which Dynegy continued to operate and commercialize well in the face of some very tough economic conditions. I'll touch on our strategic achievements during the year that position us for the future. Next, Holli will provide full year 2009 financial results, discuss annual performance drivers for each of the key regions and turn to our 2010 estimate. I'll then provide my perspective on the industry, discuss why we believe – and discuss why we believe Dynegy is a long term value play. Finally our Management team will join me in answering your questions. Please turn to slide four. Significantly lower commodity prices reduced demand and made 2009 a very challenging year for the company and the electricity sector as a whole. Despite a tough economic landscape, Dynegy continues to execute well by staying focused on three key objectives, operating and commercializing well, prudent financial management and strategic positioning. Here I'd like to spend a few minutes discussing our significant accomplishments in each of these areas for 2009. Starting with our operations, our base load coal fleet continued its reliable track record achieving end market availability above 90%. Of U.S. electricity demand dropped by about 4% in 2009, our production volumes were essentially flat. This can be attributed to the diversity of our fleet and our constant focus on reliability. On the commercial side, our strategy has helped us increase near term earnings predictability. In fact, our commercial activities more than offset lower commodity prices in 2009. We also significantly exceeded our 2009 guidance estimates and today we're reaffirming our 2010 guidance estimates. Holli will provide more details in a few minutes. Another key accomplishment last year was our successful execution of our strategic transaction that substantially increased our liquidity and preserved a strong diversified asset base, 30% of our outstanding shares were redeemed in this transaction eliminating the dual class stock structure and associated rights and restrictions. The transaction created 100% publicly held company for the first time in our corporate history. With cash proceeds from the transaction we then repurchased approximately 830 million of 2011 and 2012 debt obligations and we initiated a cost savings program expected to save 400 million to 450 million over the next four years. So we're now able to center our focus on the operational and commercial aspects of our business while being in a position to capitalize on expected longer term power market improvements. With that, I'll turn the call over to Holli to discuss 2009 financial results.

Thanks, Bruce. Please turn to slide six. Before I begin I'd like to point out that this presentation does contain non-GAAP measures that are reconciled later in the presentation and fourth quarter results are also covered in the appendix of this presentation. Now turning to full year financial results, annual adjusted EBITDA decreased only 2% from 818 million in 2008 to 803 million in 2009, despite the significant decline in market power prices and spark spreads which negatively impacted our results from generation. The decline in market prices and spreads was more than offset by the impact of contracting 2009 volumes at higher energy prices, actively managing swap and option positions and other commercial activities. We also benefited from a net increase in capacity and tolling revenues, improving – I'm sorry – improved basis in Illinois and stronger run times from our natural gas combined cycle facilities in the Midwest and Northeast due to positive spark spreads and fewer planned outages. These benefits were partially offset by a significant decrease in interest income due to a drop in interest rates as well as an increase in operating expenses related to more planned outages associated with our coal fleet in Illinois and Moss Landing in California. Turning to capital and liquidity, we had net debt and other obligations of 4.9 billion as of December 31, '09. This included cash on hand and investments of 471 million and restricted cash and investments of 869 million. At the end of the year, Dynegy had collateral of 827 million posted and liquidity of 1.9 billion. This asset increased to 2.3 billion as of February 19, 2010. The increase in cash on hand reflects increased cash in-flows from the company's collateral clearing agent due to margin requirements and reduced options position. However, as prices and…

Thanks, Holli. Please turn to slide 11. Over the long term, we expect commodity prices and demand to rise while U.S. electric demand declined approximately 4% in 2009 it's important to remember it's still within the five year average range shown on this slide. As for 2010, the business environment may continue to be challenging with commodity prices remaining volatile. Even so, weather spikes offer opportunities to capture incremental value as we experienced in late 2009 and in January. Many of you have asked how we can capture value even though volumes are essentially 100% contracted for 2009 and why our adjusted EBITDA range is wide. A bit of explanation here. When we say volumes are 100% contracted this does not mean all of our assets potential production capacity is sold. Instead this percentage represents contracted volumes using a current commodity price curve and evaluating the probability of whether or not it will be economical for an asset to run. For example, as of December 31, we have sold approximately 25% of the production capacity of the Independence facility in January; however the January weather event gave us the ability to sell additional megawatts from Independence. This allowed us to capture the power price volatility on an interim month basis. Now turning to the graph on the bottom left of the slide you can see that commodity prices are trending upward. Over the next two years, U.S. electricity demand is projected to increase by about 2%. On a supply side of the equation we believe that new generation will come on line at a very slow rate given the slowdown of new Power Plant development and construction activities. Barriers to entry remain very high in a capital intensive industry and very few base load and intermediate development projects are actually…

Thank you. Our first question comes from Neel Mitra with Simmons & Company International. Your line is open.

Good morning.

Hi, Neel.

Can you give us some more information regarding the option or caller positions for 2011, specifically how much upside it allows you to retain if synergy prices improve? I'm looking at the disclosures and it seems like the weighted average around the clock pricing on the hedges is somewhere between $30 and $40 a megawatt hour. How much higher could you receive if the power prices and the floor curves are a day-ahead increase above that?

Maybe Neel, I'll start. As you can imagine, it's probably not in our best interest to talk details of the positions we have. One of the things that we highlighted on the call today is it takes a lot of active management around these positions. So we – what I would say is, what we tend to do is, we'll buy our puts at market but we'll sell the calls above market and so we do feel like there is room for upside associated with the callers that we put on but I think I'd rather not go into details about what the value is associated with those.

Okay. And then just in general, what do you believe it needs to happen in MISO for power prices to recover beyond the natural gas prices increasing? Does a significant amount of coal capacity need to be retired or wind buildo-ut moderated? Just what are your thoughts and also the timing of a recovery in the region as well?

Well, probably, Neel. Probably, the biggest thing is just more of just a recovery in general demand. There has been curtailments on the industrial side all through the Midwest with auto parts manufacturers and things like that, that all reaches down into our region while agribusiness has been I think relatively speaking compared with manufacturing, I think the agricultural side has been somewhat unscathed. You just generally need an overall trend in the right direction in terms of economic recovery. In addition I don't think we should forget that 2009 was a year where there basically was not a summer in the Midwest. We had more of a normal weather pattern but beyond that–

Okay. Great. Thank you.

Operator, we're getting a lot of static on the line. I don't know if there's anything on your end.

One moment. Our next question comes from –

A lot better.

Lasan Johong with RBC Capital Markets. Your line is open.

Thank you. Good morning, Bruce, Holli.

Good morning.

You got me excited there for a second when you said commercial activity was one of the reasons why you did better. I'm assuming that's not going to be prop trading?

That's correct. Any of the activities we do from a commercial perspective are more about reducing risk around our margin.

That's disappointing. A couple questions around sensitivities. There is a chart in the back that details $5 gas and kind of what you expect from there but $4 gas environment I think it's pretty clear that there's some risk to the downside and you may trigger some debt covenants in the third quarter. Can you talk about what if any consequences there are to triggering those covenants?

Well, I might start, Lasan with the fact that given the level of commercial activity that we've executed for '10 and '11, those sensitivities are quite small to changes in gas prices. So when we look at our earnings, I would say for '10 the things that we would look to more are going to be around what sort of outage rates we have, what happens with basis, what happens with capacity markets, it's really probably less tied to natural gas price changes in the near term. But that said and I would say that we don't have concern around the covenants, I would start maybe with that statement as an overall statement but to give you a little more detail, we do have three different covenants. One of those is the interest coverage ratio which actually if you trip that it is a default. There's another that would if tripped what it would do is to impact our access to the revolver so it could reduce the capacity of the revolver. And the third has to do with just it's an incurrence test that in the event we want to sell assets or incur more debt we would have to be in compliance with that. So don't have concerns as we look out over 2010 with the interest coverage ratio. Depending on where some of these other factors as I mentioned earlier fall out there could be some reduction in capacity around the revolver but that's when we take into account the level of liquidity we have and match that to our Commercial Operations, we don't have any concerns about lack of or sufficient

Excellent. Bruce, you mentioned that your Midwest coal procurement was locked in through 2010 but if you believe that commodity prices are headed up in the near future, shouldn't you be looking at renewing your coal contracts in the near future?

I'll turn that to Chuck.

Yes. We certainly are doing that right now.

That's all you're going to tell us?

Yes.

Okay.

We give you guidance one year at a time. I think you look at the graph and whichever slide that was on that I referred to with coal costs, it really came out of the last equity conference that was out there, there was a lot of discussion about rising Appalachian coal prices and we just wanted to remind people that PRB is not as volatile as Appalachian was. So if we get a good global economic recovery, China recovery, Far East recovery and a rise like it happened the last time, you should see a corresponding rise in Appalachian coal prices. PRB picked up a little bit. We're going to be mindful of that, be prudent how we manage it and Chuck and Rudy and the team will be out looking to go ahead and lock in '11 and do things like that at prudent levels but it's not an exposure that's going to sky rocket like Central App has in the past.

Understood, understood. One last question, Coal to gas switching impacts going forward, do you see any positive or negative?

Well, this past year, we definitely saw coal to gas switching and we saw I think overall for the year our Midwest gas was probably up in the 10% plus or minus range, Northeast gas plants were up higher than that, so that was a positive, net positive for us for our coal fleet. I don't think we were impacted to the negative side with coal to gas switching in the Midwest because of the low cost PRB position that we've got. As we look forward, that could be something that's going to be pretty detrimental to people that aren't running PRB in particular I would think because those were the plants that were first to be impacted with coal to gas switching or those that are running Central App coal and more of a gas at the margin world, with us running PRB in MISO where coal, higher cost coal sets the margin, half or more of the year, I don't think that's necessarily going to be a big negative for us.

Great. Thank you.

Okay.

Our next question comes from Dan Eggers of Credit Suisse. Your line is open.

Good morning. Can you talk a little bit more about the O&M cost savings over the 450 million over four years and kind of what milestones we should be looking for and how you expect that to layer in relative to guidance this year?

Well, I think the main milestone you want to be looking for is just that we're hitting the cost targets in terms of the savings. What we've put in place is from an internal standpoint. The O&M for this year is in the range of around 30 to $40 million is what was targeted over last year but more importantly I think you'd want to also be watching to say okay are we keeping that 90% in-market availability up because you don't want to be sort of pound foolish, here if you will, by cutting costs and then impacting your reliability. So this was a pretty carefully comprised plan of looking all through the operating side of things, CapEx side as well as G&A coming up with specifics that we could tie the cost reductions to without impacting reliability or being in the market.

And I guess the other question, just the demand in the first quarter has been pretty good in your markets. Any feel for how that's affecting guidance for the full year or are we too early to start making weather calls?

Well it's obviously very early in the year. We gave guidance for 2010 and we're just reaffirming those numbers for 2010.

Okay. Thank you.

Yes.

Gregg Orrill with Barclays Capital. Your line is open.

Thanks very much.

Hi. Gregg.

Hi there. Just following up on Dan's question around the O&M savings, just whether there's sort of a schedule on how that's going to come in that you're willing to disclose?

From a year to year perspective or –

Right.

Or a multi-year going forward?

Yes.

Yeah. I don't think at this point we would want to go out with a multi-year schedule. I think we would just stay within the range that I just gave to Dan of around 30 to $ 40 million year-over-year.

Okay. And obviously that would accelerate over time?

I'm just going to say, it's 30 to $40 million for 2010 and go with that for right now. It's an overall program of savings that add up across O&M, G&A, CapEx to around 400 to 450 million. That's over 2010 through 2013. In terms of your modeling if you assumed I think relatively flat, that's probably a good way to be.

Okay. And then just on the power volumes hedged in the Midwest in '10 and '11, you show 80 – I'm sorry, 75% hedge for 2011 on slide 32. Is there pricing information that you're willing to confirm for the Midwest for '10 and '11 there on your hedges?

We did for '10 in terms of – Holli referred to what the gas price is based on for our guidance, not for when the hedges are put on however.

Okay. That really is the $40?

I think you referred to it off of a gas price? Right, Holli?

Right, right.

Okay.

I mean going forward from there, no, at this point, we're going to stick with our model of giving guidance out, Gregg one year at a file for 2010 and will be 2011 towards the end of this year.

Okay. And then just last, the fourth quarter looked strong and I was wondering if your comments talk more about the year than the quarter, if you could talk about some of the drivers there including Commercial Operations.

For the fourth quarter?

Yes.

Yes. We had some detail certainly in the appendix on that but I think what you would, the best way to think about it, Gregg, is that period-over-period, what we found, I'm sorry, Norelle help me with the –

Slide 20.

May be we can work from slide 20 and talk from there and again, these are going to be regional for each of the, there will be slides for the Midwest, West and Northeast that we can go through. But I would say overall, what we found is we probably had a little more in the way of active, certainly commercial management and a focus on costs. But if you look on, you'll see on the Midwest on Page 19 that we're down only slightly on an adjusted EBITDA basis. On the West we are down from 26 to 10 million on an adjusted EBITDA basis given the lower demand out there. And then the Northeast we're up a couple of million from 20 to 22 million out there so the biggest driver though being the Midwest which puts us relatively flat then to only being slightly down for the fourth quarter, with, I would say, a similar set of drivers as we had for the year.

Okay. Thank you.

Our next question comes from Ameet Thakkar with Bank of America/Merrill Lynch. You may ask your question.

Hi.

Please check your mute button.

I always, sorry about that. I had a quick follow-up question on Gregg's question on the fourth quarter. Do the results include the assets that are going over to LS?

Yes. They do.

Okay. Thank you very much.

That transaction closed December 1st, 2009 so you have two months, two out of three for the quarter.

Okay. And then Bruce, on the coal supply issue, I understand that you guys are looking at the actual tons and '11 now but on the transportation side, understanding that you guys are hedged through '13, would the idea be that you would come address the transportation piece as you have kind of a view on how you want to commercialize the underlying power in the Midwest before you start I guess contracting up the rail?

It's probably – you'd probably address the rail contract when you get closer to '13. That's something you would be working on it in '12, maybe you'd be working on it in '11 but I don't know that you should be doing too much in front of that because it's a very cost advantaged contract. If you go to do much of anything there might be a blend and extend option but that's raising near term prices to have a longer term contract. I think we like the contract we've got, the provider’s performance has been good and probably something will be acted upon more around late 2011 or 2012 time frame.

Okay. Thank you very much, guys.

Okay.

Andy Smith with J.P. Morgan. You may ask your question.

Hi good morning guys.

Hi. Andy.

Good Morning.

Wanted to see – just kind of looking back, you guys commented on about a 5% drop in coal production for 2009 and you mentioned weather demand, wind plants backing it down on the off peak, I think there was one other factor there. If you had to break down that 5%, could you sort of give us a rough range of like what the biggest driver, was weather the bulk of that? What was going on in terms of behind that number?

Giving an answer would probably be anecdotal at this point. I think probably '09 clearly the absence of a summer or any kind of warm weather was a pretty big impact. The off peak in wind was probably more of an off-peak in pricing more than it was backing off our actual plants. I don't think we really – I'm looking at Chuck, I don't think we really had our plants, they were not backed off to need to cycle or something. That was impacted more of the higher cost plants in the region, that didn't impact ours, that’s right.

And beyond that, I think given the absence of the summer, you really in the Midwest, Andy, you didn't have the period of a typical year where gas would set more of the marginal power price or I guess given the low gas prices and low demand you could argue well maybe it did. But it was more around sort of that absence of the summer and really just an overall low price all through the summer that probably was the biggest impact in 2009 in the Midwest.

Okay. Got you. So it would be fair to say then that you guys, we should maybe think about putting meaningful leverage for you guys from a weather dynamic to the extent that you lost? It sounds like what you're saying is you lost a large number of what normally would be gas based hours in terms of the dispatch?

In a more, yeah. In a normal weather and historic gas price environment, yes.

Okay. Very good. That's helpful. I just wanted to get a little color around that. Thanks guys.

Okay.

Brandon Blossman with Tudor Pickering. Your line is open.

Hi, Brandon.

Hi, how are you?

Good. How are you?

Good. Good. Actually, got most of my questions addressed. The remaining one, what's the status on Plum Point? Are you making any additional efforts around the sale of that or is that pencils down?

Now, we are I think, I don't know that I'd say pencils down, Brandon, but given that construction is progressing and expect that to be online this summer. As we've talked a little bit before, one of the risks associated with that plant was a construction risk and there were certainly people that were more and less comfortable with that. So I think it makes more sense for us to pursue something around that once we've taken that risk off the table. So we're certainly active and still understanding the opportunities and such but I wouldn't expect anything before construction is completed.

Okay. So it's still non-strategic maybe relaunch of process once it's up and running?

That's correct. Wouldn't expect to hold it long-term.

And total dollars spent to kind of COD, cash spent to COD, is that the $25 million?

Well, that's an interesting one because it was 100 – these are from back in the frothy capital market days, it was 100% debt finance so our exposure is a $15 million LC. And we've sold out a couple of pieces of it before so it's arguable on a net cash basis. I guess cash in, cash out we're already probably net positive on the investment. So…

Capitalized interest sounds like is what's left?

Yeah. I mean I don't know on book value or something like that. But I mean it's – I think you summed it up pretty well to say it's still a non-strategic asset and relaunch of process. But our view is more from our corporate development guys running the process. The basic view was people were sort of discounting too much in for the remaining construction risk given how far along it is. It's already at some test burns and things like that. At this point, it's better to get it to COD and get it up and then just not have construction risk on the table.

Okay. That's helpful.

Okay.

That's it. Thanks, guys.

Okay. Thanks, Brandon.

Our next question comes from Julien Dumoulin-Smith with UBS. You may ask your question.

Most of them have actually have already been asked. But I'll follow-up on this one. As far as the hedging strategy goes, I see 85% in 2011 at this point. On a go forward basis let's say 2011, would you anticipate to have that kind of a hedging level? Or did I hear you right on the call sort of moving back to the original L plus one kind of approach?

No. I think when, Julian, when we get to the kind of end of this year or around the end of this year when we're giving guidance for 2011. I would expect that it'll be – 2011 would be pretty well taken care of just like 2010 was as it came into this year.

And then more for 2012, let's say is that more of a 50% target at this point? Or just trying to get a flavor as to where your sort of long-term view on hedging sales stands?

I think still given the way the market is, it's still probably looking out a couple of years and having pretty firm numbers around those. And then being more open beyond that because that seems to have worked very well since we sort of reworked the commercial strategy and the commercial management around the end of right around the end of 2008, first part of 2009.

All right. Great. Well, really appreciate the time.

Okay.

See you guys soon.

Our next question comes from Brian Russo with Ladenburg Thalmann. You may ask your questions.

Hi, good morning.

Good morning.

On the third quarter call and presentation, you outlined the expected volumes from each segment in 2010. Just could you comment on any changes on the expected volumes since that time?

I don't think there are any material changes to that, Brian.

Okay. Thank you.

Okay.

Our next question comes from Brian Chin with Citigroup. You may ask your questions.

Hi, good morning.

Hi, Brian.

And please remind me again, what percent of Danskammer's coal is sourced from South America?

Effectively all of it.

Practically 100%. We have options to be able to bring in some coal through rail. The infrastructure is there but we have typically used the South American coal.

Okay. And when do those contracts roll and/or the options to bring it in by rail?

Yeah. Well, the options to bring it on rail are really that there is a rail siding and there is an ability to do it. I mean I don't know we haven't done it.

We did some, we've done it some. It's not a major portion of our coal delivery strategy and with respect to the contracts we buy fiscal coal as we believe we need it delivered. And we hedge our coal requirements with financial instruments to the extent that we want to sell power past the amount that we could generate with the fiscal coal we procured.

And maybe just to be clear, that was a poor choice of words on my part, Brian, when I said we have options. We have alternatives. We don't actually have an option in place to do the rail delivery.

I see, that's right. My mistake. And lastly just a follow-up on Ameet's earlier question, I know you've got rail contracts for the Midwest out until 2013. But what are sort of the market quotes right now for rail costs per ton or per MMBtu from PRB into Illinois?

Brian, it depends on what kind of volume you've got and the term of the contract. I mean I don't know that there's an exact replication that you can come up with for as much we, as big as that contract is coming to eight different plants and the volume that comes through. So it's really more of a negotiated thing. I mean you can look at some spot rail rates and things like that but I think it's a different market.

Okay. Great. Thanks, guys.

Okay.

Our next question comes from Craig Shere with Tuohy Brothers Investment Research. Your line is open.

Hi, Bruce. Hi, Holli.

Hi, Craig.

Hi.

Bruce, a couple kind of just quick macro questions for you. The first kind of taking off on Neel's question about recovery in MISO. Some of your peers, Bruce, have been talking about some pretty significant coal fired generation being retired because it's unlike your slide 12, it's not economic to do the environmental CapEx on those units.

We're very much in favor of them doing that.

Okay. Well, I just thought maybe you could comment on how real you believe this trend is in MISO and the advantages it may have for your efficient Baldwin unit and any combined cycle plants? And just the final question, you've talked for really quite a few years about the benefits of consolidation in the industry. And we've had a lot of false starts that never really get anywhere in the industry. Do you think that there's any reality over the horizon there?

Well, I mean first off with regard to retirement. I think we aren't going to, I would just say we're not going to bake into our numbers or guidance because we only go out a year. We're not going to try to bake into some forecast that – X number of plants are retired or things like that. I do think the work that we're doing around our coal fleet will result in a very clean set of coal fired power plants with some of the lowest levels of SOx, NOx, mercury and particulates or what some people might call traditional pollutants. There are a number of plants around the country that haven't moved forward with that. They weren't pursued as aggressively under new source review over the last maybe eight or nine year. And if EPA gets aggressive with new source review I think that could become a major issue in terms of people having to look at their plants. Particularly, some smaller coal plants, particularly plants that are also burning Appalachian coal that they could probably be pretty well impacted by having to run the economics and say, look it's going to cost XXX $100 million to put scrubbers and bag houses and back end controls on it. And when you run the math that plant is just not economic. That in the long run is good for plants that have made the investment, that have cleaned themselves up because they are going to be on the ground. And they will be operating with relative stability for a long period of time. And I think that's really where our Midwest fleet falls into that second category. With regard to consolidation, we just feel that as we've talked for several years that it does make sense. You can run…

A quick follow-up on the MISO question. Do you see the potential benefits of this being like a two to three years from some retirements? Or is this really just a longer term trend?

With regard to that, I mean I think you'd have to, I guess I would say give Lisa Jackson a call at EPA and ask how aggressive her team is going to be on pursuing new source review on coal plants that haven't put in the backend controls to have the best available control technology.

Fair enough. Thanks a lot.

Okay. Operator, we'll do one more question.

Thank you. Our next question comes from Ivana Ergovic with Jefferies. You may ask your question.

Hi, I have a quick question on depreciation. Basically, I see 2009 depreciation was $335 million and grows to $316 in 2010. I mean I would assume it would go down given that you still owed your assets? Or could you just explain why is it going up or whether $335 already excludes the depreciation from sold assets?

I think when you think about the depreciable base in 2009 you're right. It's changed with assets going down as well as with some impairments but, gosh, those impairments went through a separate line from depreciation. But we're also with the capital spend program between consent decree and maintenance, we're obviously increasing the base for that.

Okay.

Let us maybe take that off line and we can get you some details around that and be happy to walk you through it.

Okay. Thanks.

Okay. Operator, that concludes today's call. We look forward to seeing some of you at the J.P. Morgan conference in Miami next week. Thank you again for your time this morning and your interest in Dynegy.

This concludes today's conference. Thank you for your participation. You may disconnect at this time.