Good morning ladies and gentlemen and welcome to the NRG Energy's Fourth Quarter 2007 Earnings Results Conference Call. At this time all participants are in a listen-only mode. But, following the presentation we will conduct a question-and-answer session. [Operator Instructions]. Also note that today's conference is being recorded. And now I would like to turn the meeting over to Ms. Nahla Azmy. Please go ahead.

Thank you Sophie. Good morning and welcome to our fourth quarter 2007 earnings call. This call is being broadcast live over the phone and from our website at www.nrgenergy.com. You can access the call presentation and press release furnished with the SEC through a link on the Investor Relations page of our website. A replay and podcast of the call will be posted on our website. This call, including the formal presentation and the question-and-answer session will be limited to one hour. In the interest of time, we ask that you please limit yourself to one question with just one follow-up. And now for the obligatory Safe Harbor Statement, during the course of this morning's presentation, management will reiterate forward-looking statements made in today's press release regarding future events and financial performance. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important risk factors contained in our press release and other filings with the SEC that could cause actual results to differ materially from those in the forward-looking statements, in the press release, and this conference call. In addition, please note that the date of this conference call is February 28, 2008, and any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events. During this morning's call, we will refer to both GAAP and non-GAAP financial measures of the Company's operating and financial results. For complete information regarding our non-GAAP financial information, to 1most directly comparable GAAP measures and a quantitative reconciliation of these figures, please refer to today's press release and this presentation. And now with that I'd like to turn the call over to David Crane, NRG's President and Chief Executive Officer.

Thank you, Nahla and good morning everyone. I am joined here today as usual by Bob Flexon, our company's Chief Financial Officer; Kevin Howell, Head of Commercial Operations; Drew Murphy, our General Counsel, Krishnan Kasiviswanathan, our Chief Risk Officer, John Ragan, our Northeast President. Northeast region had a phenomenal year last year and for reasons that should be obvious from anyone who has read the earnings release by Clint Freeland and Maurizio Guacharo. This is the call... first call of the year where we normally set the stage for the year ahead and we are going to do some of that. We're also going to talk about the changes in the orientation that were announced in the press release today, because they are a little bit out of the ordinary, but as I said in the press release today. These are evolutionary changes rather than revolutionary changes in the way that company is organized and this is actually the end of an organizational process rather than the beginning and that these changes were determined and decided upon last July and we've been working through to this conclusion today. So, I am going to be referring as we go through the presentation to slides which appear on the website and I'll be referring to those. So, stay on slide three, table of content. Actually after 15 quarters of using the same format in the last few quarters, we have actually not even had a table of content, so our only remark now is that this is actually the orientational format that we will be using going forward. I will be giving the operational review this quarter but in subsequent quarters it will be given by Bob Flexon and so lets begin. On slide 4, since we have a lot of information…

Thank you David and good morning. Today I'll provide our customary review of the fourth quarter and full year 2007 financial performance, update our guidance for 2008, and set forth our 2008 capital allocation plan along with the necessary implementation steps. Also in response to request for the first time I'll provide adjusted EBIT information on our portfolio assuming a limited to unhedged position. Slide 12, provides an overview of our financial performance and plans. 2007 adjusted EBITDA of $2.28 billion was well in excess of our initial 2007 guidance of $2.05 billion with $20 million below our November 2007 target of $2.3 billion primarily due to the impairment of two commercial paper investments and higher than expected outage cost in December. Although full year adjusted EBITDA came in slightly below November guidance, our free cash flow from recurring ops exceeded our November target coming in at $1.25 billion. The 2007 recurring free cash flow yield was a very healthy 12.8%. As we typically do, our capital allocation plans for 2008 are off to an early start with the December 2007 launch and January 2008 completion of $100 million of common share repurchases. In addition, our Board authorized in February 2008 an additional $200 million in share repurchases, which we expect to be complete by November 2008. On December 31, 2007, we prepaid $300 million of our term loan B, by doing so we achieved a corporate debt to corporate EBITDA ratio as defined in the credit agreement below 3.5 to 1. By achieving this threshold the company benefits by receiving a 25 basis point step down and the interest rate charge from $2.8 billion term loan B and $1.3 billion synthetic LC facility. Slide 13 provides additional high level financial comparisons for the 2007 results. The left hand side…

Thanks Bob. I know we have already taken up a great deal of time and those of you who were looking at slideshow are experiencing an anxiety that we are going to turn this into a Fidel Castro length earnings call. And as you look at those I know, if you don't need it I could spend an hour of course talking about these. I promise you now that I am not going to do this. Each of these things is highly important to our strategy and to the success of processes. Well I am going to say this, we are going to come back with this... whether industry or banking accounts for the response we ordered and we will find it and an appropriate formulation after all these topics has been thoroughly secured and if time is appropriate let me just make a few comments on these on the page starting with slide 24. As you all know and as you all are experiencing, in times like this when the rate is negative, that people see the negative view volatile portion. That is why I believe in NRG stock that is sort of target. And there are couple of things, but first any private legislation can be enacted is effective in financial advantage. I will walk into the end of next decade, it has to be and if we do nothing. And unlike many other companies, we chose not to adopt wait and see as we are aggressively pursuing compensation strategies that I outlined clearly at this time. Impending a carbon regulation from a very modest negative to a significant positive in the long term. Worth of a lavish focus on carbon has overlooked over the past few months is that there at least four dynamics underway in our…

Thank you, sir. [Operator Instructions]. At this time, our first question will come from John Kiani of Deutsche Bank. Please go ahead.

Good morning.

Good morning, John.

Congratulations on the promotions.

Thank you, hold on I'm sorry, you meant Bob.

I have some questions on slide 19, the market EBITDA slide. Bob, you were walking through this slide, if I am reading this correctly the 3.16 billion of market EBITDA using call 09 curves, it is just using the forwards curves. Do you have any numbers or analysis that you can share with us as to what that 3.16 billion of market EBITDA would look like with heat rate expansion and market recovery, some of your IPP peers show this figure, not with just the current forward, but what it looks like under market equilibrium type scenario, do you have any guidance or help you can give us on that?

Yeah, John included the sensitivities so if you look in my blue box on that slide, the last two lines in the blue box show the sensitivity around heat rates. So if you get a half heat rate improvement as an example, say an ERCOT [ph] you got an upside of about $200 million on an un-hedged power basis. So the sensitivity is right there, you can just pull it off the prices that are given in the grey box, come up with your own what you think heat rates could do and then you got the sensitivity there on how to do the math to adjust the EBITDA number from there.

Okay. Thanks and then, on the restrictive payments basket... I think you made some comments that '09 looks like... looks to be a year where you have incremental or better RP capacity, can you walk through that in a little bit more detail?

Sure, John when we filed the 10-K today, we will have the chart updated on our base load hedges that go up 2012 and the natural gas hedged price if you will on that chart for 2009 at a 73% hedge profile, the $7.70 which is $0.20 higher than what it is in 2008, plus you got 20%... 27% of the base load open. So, if you just take that higher hedged price in '09 versus '08 you are going to get a significantly higher net income in 2009 and 2008 and the basket expands based upon the net income calculation.

I see. Okay, thanks. That's helpful.

Thank you. And at this point, our next question will come from Elizabeth Parrella from Merrill Lynch, please go ahead.

Yes, thank you. Actually following up on that same line of questioning, Bob, your comments with respect to the RP expansion this year, does that assume no unrealized losses on mark-to-market activity or is that based on what you see those losses would be using the forward price of gas, how should we think about that?

It's based on our forward view of net income, which is... which we just strike... when we strike that curve we don't forecast what mark-to-market gains and losses could be going forward. So, that will create some noise in the numbers on the net income. So, that's why... and that's one of the reasons Elizabeth that we leave as much room as we do while we show that 2008 will have greater than 130 million or actually be fairly higher than a pretty significant increase over that 130 that I show but that is kind of the cushion that we keep to be able to absorb changes caused by those types of fluctuations.

I mean that assumes I just wanted to be clear that assumes you would look to mark-to-market losses, which one would expect given where your hedges are for gas and where the current gas price is or does it just zero those out for the remainder of the year?

Yeah, I mean the way you need to look at that as well as make sure that greater than 300 million expansion, that's the fourth quarter of '07 result and then the first three quarters of 2008. So, you weight that risk on the next three quarters.

Okay. Okay, and then just with respect to the deal with Credit Suisse on rolling this out, if I understand it correctly their upside kind of a cap as of December end, they don't get anymore upside as the stock continues to move up?

Yeah, we are going to let the GAGR feature or the option feature in that structure, we'll settle that out in the fourth quarter. We are not going to roll that into the future. So, it would just be pure debt beyond November of this year and then we'll just settle that out and we'll keep a 100% of the upside of any share price movement within that structure.

Right. Now, my recollection is I think you accrue the interest on this sort of through October of 2008, if now there is going to be additional interest expense associated with rolling this out another 20 months?

Correct.

At the sort of same type of rate?

Yeah, actually the way we are structuring it is that we are going to... it is going to be a pretty much exactly the same rate. It would be the blended cost of like 7.5%.

Okay and then, just one another question. The hedging profile that you have given us on slide 7, you mentioned what the average gas price was for '08 and '09, is that going to be disclosed in the 10-K for all the years in that?

It is... it is disclosed and I think the slides that we showed earlier on the hedged profile, I believe... it is as of the end of January. And I think that matches up with our K.

Okay. Thanks very much.

Thanks.

Thank you; and our next question will now come from Michael Lapides of Goldman Sachs. Please go ahead.

Hi, guys congratulations on a great year. Can you provide a little bit of update on longer term bobs regarding your environmental CapEx on existing co-plant?

The... my consent, longer-terms, how long a term did you... I mean behind the multiyear...

Yeah, just in terms of what's contracted, what's not contracted, what you are saying in EPC cost?

Okay. If you want to?

Well, the environmental CapEx project for 2008 is 359, of that 359 about 223 is from Northeast. That construction is pretty well, it's under way and it's pretty well locked in. So that pretty much covers 2008. Towards the end of 2008, the South Central will start picking up and then in 2009 it becomes the higher level of spend. I think we are in the beginning process as of now of time most cost down, so that's in an earlier stage and then further out, the one that... really the one that up in the air right now is Indian weather which carry a pretty high environmental CapEx cost that's the very early stages and we're still wrestling our own minds whether or not we're going to make that level of investment or not. So, that's still up in the air.

What are your options if you decide not to make the investments in the divestiture?

Well, I mean...I think everything is on the table. We're going down certainly the path of making the investment, we're doing the permeating work that we need, so we are not delaying anything there. So, we're retaining that option to make sure that we do have time to make the environmental improvements but if we decide at some point that it is just not economic, the choices then are either you just run through the end date or you sell it or you look for some type of alternative plans for the site whether it's other forms of generation. So, I think everything is on the table with it. When you had this type of standard, this level of spend you are going to look 4 or 5 different paths to make sure you take the most favorable one from an economic standpoint as well.

Michael, just to add a little bit to that, it is difficult proposition for the Delmarva Peninsula, which is obviously geographically a peninsula is that there is definitely discomfort in that area with cold fire generation of any type as we found over the last year. But there is no gas pipeline down there. So, the options are pretty limited so that's the issue that not only we need to struggle with but, the people charged with maintaining responsibility for the grid in that area have to struggle with as well.

Got it, thank you guys, much appreciate it.

Thanks, Michael.

Thank you. And our next question will now come from Ryan Chin of Citi, please go ahead.

Hi, question on the market EBITDA slide, or South Central load contracts, and please correct me if I am wrong on this, but there were, if I remember on a couple of environmental CapEx provisions on those contracts, how is that embedded in your 1.2 billion number or is the 1.2 billion just the delta between the current contractual sales price in the current quarter?

Brian, it's the ladder, I didn't do anything to adjust for the environmental CapEx spend in the pass through. I am just literally as you describe just using current market price versus contracted market price.

Okay. So, if I want to think about this in an open EBITDA framework, what I probably need to think about then is what is the value of the environmental CapEx provisions that you have in those contracts as a reducer to the net present value negative impact of this contracture value here, is that correct?

I think that's correct Ryan, I would do that.

And then one other thing, just a qualitative question. Is that the ABWR [ph] contract at South Texas point from GE and then you have Toshiba and more pouring the concrete effectively. Given that Toshiba earns the Westinghouse house design, how has managing that relationship between those two camps been, can you comment on just what has been going on there, has there been any problems?

Well, Ryan we can comment on a little of it and most of it we can't comment on. What we can comment on is that you are right while Toshiba is also the owner of the AP1000 design, at no point in our dealings with Toshiba have we have ever seen any sense of compromise or priority of one over the other. I don't know how much you follow nuclear in Japan but ABWR is the chosen design of the Tokyo Electric Power Company and Tokyo Electric Power Company and the rest of the Japanese utility industry are quite insistent that Toshiba and Hitachi both support the ABWR design now and into the future. So, we have been 100% pleased with Toshiba's support and interest in the ABWR design, whatever they are doing with the AP1000 and the rest of your question about... I really rather not comment on at this point.

Fair enough, thank you.

Thank you. Our next question will now come from Gregg Orrill from Lehman Brothers, please go ahead.

Good morning.

Good morning Gregg.

Just coming back to slide 8 on the heat rate sensitivity, two questions, the first is you provided the sensitivity around one end in Btu per megawatt hour around the clock heat rates, how far do you think we are between now and for your base load fleet? And then secondly you left on the table the upside or the mid meridian [ph] and peaking part of your fleet, what would that also entail?

Well I am going to pass on to Kevin so he can give you on this patented/total non answers to that question.

Okay, when I think about it I mean clearly I think we saw along that we are still... rates which has led to our bias towards gas hedging against the fleet particularly in Texas and you know we have seen a nice recovery the rate still bullish from this point forward we are the absolute peak ins, I really don't want to get the same, what we think is left to the market but we are still bullish from this point on the heat rates and I am sorry what was the second part of your question?

You provided the sensitivity on base load to heat rate changes, what about the rest of the fleet just so that we can be comparable to what other companies are providing?

I think, remind me Bob, I think in the past we have kind of notionally said we think about our peaking assets as more kind of out of the money options that they tend to come into the money very quickly for short periods of time but try to model those in the forward market, you really don't throw off a lot of value from them. I think initially we have talked about those, the way we think about them in our forward guidance is around 100 million.

On the intermediacy of peaking, on the gross margin it's around $100 million to $150 million and if you had a heat rate movement of about 1 unit movement, the sensitivity is that is in the order of magnitude of around $60 million sensitivity.

Okay, thanks.

Thank you and our next question will now come from Anthony Crowdell from Jefferies.com. Please go ahead.

Good morning, this question is on New York City capacity market, are you seeing any changes in the capacity pricing and now that you see I think public service in New Jersey is trying to bring a line in to the New York City market and have you noticed any changes in the capacities?

Yeah, yeah our view is and I think we have the information on one of the web pages in here that we are seeing definite softness in the New York capacity market. It is already trending down. So that's the one soft spot in the terms of the Northeast capacity markets where all the other capacity markets were in... we are seeing strength and increasing strength but New York City is definitely trending down. That actually if you look at the tables at the top right hand-corner of page 7 you'll see some numbers on that.

Thank you.

Thank you and our next question at this time will come from Dan Eggers of Credit Suisse.

Just wanted to follow-up on the opening conversation just given by the breadth of where it looks, where it could be from where it is today, have you guys considered another hedge reset and is the market available to do that if you looked at it?

No, no we haven't looked at that and so that is not in our plans.

Okay, the next question is Exelon's proposed nuclear power station impacts us, it also has an ownership agreement with San Antonio, how does that affect your agreement on South Texas are we just seeing San Antonio being the power hungry right now?

You know, I don't want to know all the much obviously about the arrangement that San Antonio has with Exelon but certainly my general sense about the Exelon development is that they are tracking to quite a different timeframe from where we are in terms of the path that they are on. Obviously I don't want to speak for them but it just seems that the pace that they are going about it and going with the design, the sort of more futuristic design that has never been built before, I think they are trending towards the end of the decade rather than the middle of the decade as we are so. As far as I know the load in San Antonio grows quite quickly so it would be up to San Antonio but I don't see anyway in which they are sort of saying this it is either STP 3 and 4 or the Exelon 1. I would see probably more that they think about it is that they are load... base loads for 2 different time periods.

Thanks.

Operator, I think we probably... it's about 10 minutes after an hour, we probably have time for one more.

Certainly sir and our last question will now come from Nora Schonafi [ph] of MSF, please go ahead.

Good morning.

Good morning Nora.

A couple of quick questions, what is the expected cash tax rate for '08 and '09?

For 2008 I would use the, we have a forecast for 2008 of $27 million in cash taxes, for 2009 I'm using for our planning services a 25% cash tax rate and for 2010, I would use a range from 30% to 35% for cash taxes.

Okay, can you also just talk about what the major outage schedule is in 08 and '09 on the major plan, like STP or what have you?

Well, I know on STP that... they actually have two outages in '08 so that's a rare year. Beyond that I'm trying to think of anything else that is exceptional and John is there anything in the Northeast that strikes you as different year-on-year.

Well, in the fall of this year we will be doing the Hartley [ph]. The Hartley outage would be a little longer the one the back house installations. Other than that everything is fairly normal.

Yeah, is there something more specific that you are concerned about?

No, just wanted to be able to track that schedule.

I think the main year-on-year changes with STP, because with the 18 months schedule for 2 units their time is when they get through a whole year without one and then there are years where they have one and there are years like this one where they have two. So, given how many megawatt hours, that one is pretty significant but beyond that I think it is a pretty normal schedule.

Okay great. Last, but not least, I was just wondering, there has obviously been a fair amount of wind projects announced, in Texas particularly in West Texas. There is some reliability issues there, I guess there were even some yesterday on the overall wind side, how do we think about the expected heat rate expansion and just the overall reserve environment in ERCOT [ph] vis-à-vis some of the... all the noise around on the wind side?

Well, I think... I think you've raised a very important point and one that... obviously a highly topical after yesterday's wind event in Texas and you know I can't give you 100% clarity though. We look at it obviously from both sides, the impact on our fossil-fuel fired fleet and the fact that our subsidiary is successfully developing wind into that market. You know, I will make a couple of comments first in terms of what our overall portfolio, what we wanted to look like, we want to have wind in the portfolio, but I don't think anyone on the phone should think of NRG as becoming a wind play. We see wind is complimentary to our fossil-fuel fired plant and we look forward to sort of folding a few wind firms into the sort of seamless operations of our Texas fleet. The question that you've raised and that I was highlighted by yesterday's event is, I think a huge one for ERCOT, you know the system can go unstable because in the winter because 1500 megawatts of expected wind turns into 400 megawatts winds and then fossil has to scramble to come online and with several of our plants that had to scramble to fill the gap, that's a big issue and there is going to be a big debate. I think you probably read that ERCOT is commissioned to study, to try and decide how much transmission they should bring from the West Texas wind area into the markets and I think the question how you maintain systems to build in the face of massive wind portfolio is a big one. And so, I think that's probably the single biggest policy issue that... that's going to be addressed in any of our markets over the next 12 months. I know that's not an answer but that's the best I can... all I can tell you that we are fully engaged in thinking about this on all levels and obviously we'll provide our input whenever we can to whoever will listen.

Okay, Thanks again. I just wanted to say congratulations to Bob, thanks for doing such an awesome job over the last couple of years.

Great. Thanks Nora.

Okay, operator, with that again we appreciate everyone's effort, interest in the company and look forward to telling you next quarter.

Thank you. Ladies and gentlemen, this does concludes your conference call for today. Once again thank you for participating and at this time we ask that you please disconnect your lines. Have yourself a great day.