Good day, ladies and gentlemen. And welcome to the NRG Energy quarter four and year end 2009 earnings conference call. My name is Geena, and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the presentation over to your host for today's call, Nahla Azmy, Senior Vice President, Investor Relations. Please proceed.

Thank you, Geena. Good morning. And welcome to our fourth quarter and year-end 2009 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 through a link on the Investor Relations page of our website. A replay of the call will also be available on our website. This call, including the formal presentation and 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. 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 23, 2010 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, except as required by law. 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 most directly comparable GAAP measures and a quantitative reconciliation of these figures, please refer to today's press release and this presentation. 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. With me today is and delivering part of the presentation are John Ragan, our Chief Operating Officer; and Gerry Luterman, our Chief Financial officer. Also available today to answer any questions that you might have in their respective areas are Mauricio Gutierrez, who runs Commercial operations for the company; and Jason Few, who runs Reliant. So today on the 25th quarterly earnings call in the history of the new NRG, we are pleased to report on a financial result for 2009 that was truly historic in its dimension. The professionals who constitute NRG turned in an extraordinary year in 2009 even though it was the second year of a severe recession, it was a year in which national electricity demand decreased year-on-year for an unprecedented second year in a row, it was a year in which we faced relentlessly declining prices for our key commodities and it was a year in which the capital markets were still in very early stages of recovery from their near-death experience the previous fall. And in all of that -- and all of that was 2009, NRG delivered top quartile performance in safety and plant operations not withstanding that certain of our coal units were called upon to cycle more frequently, a baseload hedging strategy that insulated the company's financial performance, making the record financial year possible, effective and efficient integration of Reliant retail into NRG in all phases of business culture and management and most importantly in mitigating the risk around Reliant's wholesale supply and savvy and proactive execution across all phases of our balance sheet program, notwithstanding the challenging capital market environment, including completion of a sizable share buyback equating to between 8% and 9% of our market, significant pay down of our current corporate…

Thank you, David. Good morning, everyone. NRG operations ended the year with strong fourth quarter performance and concluded 2009 on very solid footing. By most performance measures, 2009 was one of our best years even as NRG faced some of the most challenging operating and commercial conditions since 2004. Our relenting focus on safety helped NRG achieve the second-safest year in our history with a 1.16 OSHA incident rate, better than the industry's top quartile level of 1.32. As we exited the first quarter of 2009 with a recordable rate of 1.47, we increased our focus on daily safety activities and were successful improving our performance during the remaining nine months of the year. We believe a disciplined approach and emphasis on safety sets our cultural foundation at NRG and provides the catalyst to achieve superior operating results. In 2009, our baseload equivalent availability or EAF, primary measure of plant performance was 90.5%, also above the industry's top quartile measure. 2009 was also a milestone for our EPC group with a significant increase in projects in scope from a year ago. We started 2009 by successfully delivering into operations two major air emissions projects at Huntley. Additionally, we began and completed four more backend control projects for our units at Dunkirk. We also successfully completed and delivered Cedar Bayou 4 into operations, our first natural gas fired combined cycle project, which has run at a 63% net capacity factor since its June commission. On the renewables front, two new projects, the Langford Wind project in Texas at our first solar project Blythe Solar in Southern California entered into service in 2009. Currently, our EPC group has three projects in progress starting during the last year. The Connecticut GenCon repowering projects at Devon and Middletown, as well as, the backend control…

Thank you, John. Good morning. And thank you once again for joining our call today. Beginning with our 2009 financial summary on slide 13, the company delivered strong financial results with a fourth quarter adjusted EBITDA of $489 million, a 21% increase from a year ago. As a result, NRG reported record full year adjusted EBITDA of $2.618 billion, marking a 14% increase over the past year. Adjusted cash from operations increased 26% to a record $1.862 billion for the full year. Liquidity for the company continues to grow with a year-end total of $3.8 billion, including $2.3 billion in cash, excluding funds deposited by counterparties. Focusing on the 2009 capital allocation plan, I’m pleased to say that we have successfully completed all of our previous commitments, including a $500 million share repurchase program with 19.3 million shares purchased. In addition, on December 31st, we made an early payment on the 2010 term loan B suite totaling $200 million, which brings the total payment to $429 million for the year. You cannot close 2009 from a financial and capital allocation viewpoint without noting the significant strides made in our business and development profile, including the purchase of Reliant, the acquisition of Blythe, our move into offshore wind through Bluewater, repowering the Cedar Bayou unit 4 and the development of Langford. Slide 14 presents the quarter-over-quarter and year-over-year and adjusted EBITDA bridge or waterfall slide. Looking at the year-over-year results, the significant contribution made by Reliant stands out at $642 million in adjusted EBITDA, excluding the $89 million impact related to the credit sleeve unwind. The Mass and C&I business within retail combined to build 38 terawatt hours. 2009 results benefited from warmer than normal weather in the summer with cooling degree days up about 10%. Transaction and integration costs for…

Well, thank you, Gerry. And before I make those comments, I want to thank you for those results. I also want to thank you for pitching in this quarter, if we stick to our previously announced schedule for hiring a new CFO by the end of the first quarter, which I fully expect that we will, you won't be here to accept my congratulations on the first quarter call. So I want to thank you for all that you've done over the last few months. Now, before we open the telephone line for Q&A, I want to address three important areas of the business which, judging from the questions we have received have been much on investors' minds over the past several months as they also have been focused on by me and the rest of the NRG organization over the same period of time. First, Reliant, obviously Reliant, led by Jason Few and his team had a spectacular year in 2009. After such a year, the questions that naturally arise are, these results sustainable over several years, are they susceptible to bad years, given the boom and bust cycle of the Reliant retail business under previous ownership and are the indirect costs of running the retail business in terms of credit requirements prohibitive? I am looking at slide 23. Reliant achieved the success that it did in 2009 by realizing retail margins almost double the per megawatt hour margin that we expect mid-cycle. Reliant did experience some customer attrition owing to competition in a lower price commodity market, but the rate of net attrition reduced substantially over the course of the year from 2.4% in quarter three to 1.6% in quarter four, a 30% improvement over the final months of the year and that metric continues to trend positive.…

(Operator Instructions) And your first question comes from the line of Ameet Thakkar with Bank Of America. Please proceed.

Hi. Good morning.

Good morning, Ameet.

Just on the $180 million share repurchase for the 2010 capital allocation program, it looks to me that you guys might have a little bit more cushion under the existing RP basket even do a little bit more. Is that correct? And when would you make that kind of determination if you wanted to upsize that program?

Ameet, I will turn it over to Gerry to talk about the size of restricted payments in best but I would just of course point you to our past practices, that our history has not been won and done when it comes to the share buybacks each year. In the previous years, we’ve done more than one in the course of a year. So we would reserve the right, obviously, to do more as the year progresses. In terms of the timing of that, I don't think you should think of it as happening on the first-quarter call. We would tend to space these things. But Gerry, do you want to talk about the restricted payment there?

I mean, the basket size right now is it stands at about $330 million. It's got two calls on it, meaning we have a payback on CSF I that has to be made and the share buyback. And you are right, Ameet, there is a little room under it. I mean, clearly, the driving force of this will be our performance. And as the year unfolds, the board will take a look at it and obviously try to respond to the situation as we see it. But at this point in time, the 3% commitment is the original commitment that was made. We want to reinforce that and it will be dependent on the performance of the company going forward.

Okay. and then just looking at the milestones for 2010, I guess one of the things I didn't see was addressing kind of the RP basket. I mean that was one of the things you guys highlighted at the Analyst Day. Have you guys made any headway on that front? And how should we think about that going forward?

Just on the surface, you remember again that there's a 3% commitment that was put in place. Again, as a result, this is results-driven. And we have begun discussions with the bondholders. And obviously, we are trying collectively to find a price that works for both the shareholders and the bondholders at this point in time. So, we are in discussions at this point in time is a fair way to (inaudible).

Yeah. Ameet, your eagle eye caught that. It wasn't milestone but I'll tell you that there's actually no significance due to the fact that it's not, what we said in November and we continue to adhere to.

Thank you, guys.

Thank you.

Your next question comes from the line of Anthony Crowdell with Jefferies. Please proceed.

Good morning. I just had a question. I guess CPS was stating that they were spending approximately $1 million a day in nuclear development costs when they were a 50% partner in the project. Now that you guys are picking up 100% of the development costs, is it reasonable to assume that, in 2010, you'll be spending approximately $2 million a day?

Well, I think the numbers get thrown around quite a bit and it had a lot to do with the negotiations around accruals and invoices and things like that. I would say that, on a steady state, while it can be sort of lumpy depending on what you do in terms of the ordering of long lead-time materials on the sort of biggest portion of the spend, which is the engineering, I think the overall number, on average across 12 months is more like $1 million a day for 100% of the project. And so I think you would say that's the steady state number that we are focused on and we are focused on reducing that number by a significant amount.

Great. Thank you.

You are welcome.

Your next question comes from the line of Dan Eggers with Credit Suisse. Please proceed.

David, just on STP, a little bit more kind of your thought process on the willingness to find partners, the interest in finding partners to take down your ownership stake. What is your new targeted ownership stake, given a bigger pot to choose from? And realistically, what kind of timeline should we look out for, for better clarity on what you guys are going to end up with?

Dan, I think that you should think of sell-downs of our ownership stake. First of all, because of the multiple levels of ownership, we've always tended to talk about the ownership of this project more in terms of how many megawatts would you end up owning for your account. And before we have sort of indicated to the market that where we were heading towards with under the previous ownership structure was around 1,000 megawatts which was roughly 40% of 2,700 megawatts. The plant that is going to be built is going to be 3000 megawatts, a plant, so if we start with that number. And I would say that what we are trying to do now in general terms is preserve optionality in terms of our final hold number to be anywhere in the sort of, in the 1,000 megawatts to 1,500 megawatts range. In terms of sell-down, I think you should think of sell-down in sort of three stages. First, we expect to sell down a piece of the project very shortly after DOE loan guarantee is received, if everything stays on the timetable that we are hoping for and as I indicated in the call, we would hope to have the DOE loan guarantee by the time of our first quarter call. So we would have one sell down there. And as we've indicated, at least in these sell downs during 2010, we are looking for people who not only will properly value the project opportunity but also add significantly to the project strength and viability. I think later in 2010, we would look to bring in some more partners in the project in relatively small amounts but that would also be important partners in the success of the project. When we've gone through that, I would say we would hopefully be down, in terms of our net position, NRG in the sort of 65% to 75%. That would then leave a gap as to our hold amount, which we would probably fill in the course of 2011. By 2011, as I indicated, we think that project risk is going to be very substantially reduced and at that point, we might look at financial buyers or other people that just want to be part of one of the first couple of nuclear power plants in the country. So that would be possibly more of a financial sell down and that's the way we're looking at it right now.

Great. Thank you. And I guess just kind of the ancillary to that is how much of the output either through sell down of megawatts or long-term supplier agreements do you think you need to make significant capital investment go-forward decisions?

You know, again -- and you are -- Dan, you are, of course, right to look at -- I mean to off-take and ownership, I mean, both are sort of compatible ways of mitigating. You can do one or the other. And so my answer is not going to be all that different. I would say that if you think of us as sort of ending up with a hold amount in megawatts in the 1000 to 1500 megawatt range, the amount of that that we would like to be contracted -- and I'm saying to outside parties, because there's always a chance as part of project finance structure that NRG might take some of the megawatts. But to outside parties I would say, the numbers we'd look towards would be at least 50%, more likely around 70% of whatever number we consider to be our hold amount. And I think as we said in the November investor conference, that we were in active dialogue with about 1600 megawatt of potential off-takers, load serving entity off-takers.

Great. Thank you, David.

Thank you, Dan.

And your next question comes from the line of Lasan Johong with RBC Capital Markets. Please proceed.

Good morning. David, I am a little confused as to your capital allocation plan. $2.3 billion of cash less $180 million leaves you and then another $1 billion and change in free cash flow leaves you with well over $3 billion in cash by the end of next year. It seems to me that you could go on a pretty good acquisition binge right now and pay for almost all of it with "OPM", other people's money. Mirant has $2 billion of cash on its balance sheet. Its market cap is barely $1.95 billion. The line is something like $1.250 billion on its balance sheet and its market cap is $1.7 billion. So you could use the cash on their balance sheet to buy these two companies and even if you had to make a big CapEx amount to fix their plants, it seems like it is a pretty damn worthwhile shopping spree, given your view on clean coal plants and natural gas prices. So what am I thinking about that is completely out of whack here? Why are you not pursuing these avenues?

Well, Lasan, I'll tell you my father used to tell me people who go on a binge get digestion.

Indigestion?

Yeah, yeah. That's right, sorry, indigestion. It shows you how much I listened to him. Anyway, what I would say to you is certainly having that amount of capital, while it's obviously inefficient and the last thing that this company's management or this company's Board of Directors wants to do is to hoard capital on our balance sheet earning almost nothing sitting in the bank and being high cost of capital money. But I mean what we want to do as we move through 2010, clearly we're going to be very actively looking at whether acquisitions can be done, add value as well as if we can work out a deal with the bondholders, returning capital to shareholders, so the normal pie chart where we show we have this sort of discretionary capital that we can deploy in a variety of areas, we're going to continue to pursue that strategy. The type of acquisitions you're talking about right now, while they have sort of the merits that you talked about, we just right now we haven't seen that the time is really the best for us to be pursuing those at this moment in time.

Okay. Since Dan got in two questions, I'm going to follow up with another question. Right now, your natural gas prices are very bullish, it seems. In the past, you have ruled out unwinding your hedges to capture the delta. Are we still going to assume that unwinding the hedges is not the right move for NRG at this point?

Lasan, I may not have heard you correctly. I think you said in the past, we have ruled out unwinding some of our hedges. I actually think I said at the investor conference that we always reserve the right to unwind our hedges. The caution or the reassurance, I had given investors was that, while we reserve the right to unwind hedges, the investors never need to worry that they are going to come into a quarterly call and the bar chart of hedging that John Ragan shows everyone is going to go from 70% to 0. We're not going to change the basic hedging approach of the company, but we definitely reserve the right to take off the hedges. And I am looking to see if Mauricio Gutierrez wants to add anything to that. As he's looking down at his shoes, I think he actually doesn't want to say anything whatsoever about that topic. So thank you, Lasan. We better go on.

Thank you.

We've got I think three more questions and then we're going to call it a day.

Your next question comes from the line of Neel Mitra with Simmons & Company International. Please proceed.

Good morning.

Good morning, Neel.

How do you think the DOE will react to the fact that you plan to sell down up to 50% of the project after loan guarantee is awarded as far as who they are going to pick for the second loan guarantee?

You know, we have been -- Neel, I actually thought you were going to ask the question, well, how do you think the DOE is going to respond to the fact that CPS is no longer a partner? On that, I was going to -- as people say, who's got questions for my answers? I was going to say to you that we certainly have been in active dialogue with the DOE and they've been aware of the likely outcome of this dispute and it has not changed their perception of the project. In terms of sell down of the project, certainly some sell down to certain strategic partners, I think the DOE would be would be very -- I don't think -- I know the DOE will be very, very receptive to. If the DOE is concerned that we would sell down the project too extensively, remember that what we're looking to get before the end of the first quarter is a conditional loan guarantee. They can always put a condition in it, in the loan guarantee that restricts what we do. I don't think that they're overly worried on this point but they certainly have the ability to protect themselves. And there would be absolutely no reason for the DOE to slow down their consideration of our project because -- to wait to see what we do in this regard.

Okay. And then on your earnings release, you mentioned energy margins in the south-central took a hit baseload [ph] contracts with the utility expiring. And as these contracts roll off through 2014 in this environment, do you expect it to be a net benefit as you put on new contracts or actually a negative with the current gas price environment and environmental pass-throughs that you have with some of these contracts in place right now?

Neel, I am going to ask Mauricio to talk about whether we think south-central roll offs are a net positive or a net negative relative to the market.

Hey, good morning, Neel. This is Mauricio.

Good morning.

It really depends on the timing of the roll off, which I guess the profitability of those PPAs are tied to the price of natural gas, so for 2009, that had a very different impact than it is going to have in 2013,14 and beyond where we expect some the other contracts to roll off. So I think it is difficult to say right now what will be the ultimate impact to the profitability of those PPAs since it's tied to the price of natural gas.

Just really quickly, how would the environmental pass-throughs with the CapEx that you spend on Big Cajun be impacted by the roll offs?

Well, I think, if we have a big environmental CapEx, I mean obviously we'd like to spread it across as many off-take agreements as possible. It's very hard to predict the specific circumstance. But obviously, as with everywhere, the rates that retail electricity providers, not-for-profit rural co-ops in Louisiana charges, you know, it's a political issue. So even though we have these contractual rights, of course, we have an interest and they have an interest in having the least burden as possible on their retail rates. So, we would obviously like to have as much co-op contract coverage as possible. I would say that, even with natural gas price dropping, I think that the co-op -- and this is a trend we've seen, particularly among not-for-profit load serving entities, co-ops, munis, for all the sort of bearishness that we see and you all see and feel in natural gas prices and all of the talk about natural gas is the power generation fuel of the future, the people we serve are -- still vividly remember the pain they went through when natural gas was $15 per million BTU and the benefit of having a diversified generation mix. The co-ops in Louisiana had by far the lowest retail rates in Louisiana, relative to Entergy and CLICO because of Big Cajun. So I don't think they're going to forget that fact.

Great. Thank you.

Your next question comes from the line of Jonathan Arnold with Deutsche Bank. Please proceed.

Good morning.

Jonathan.

Hi. I have a quick question on -- you characterized the issues of the holding out of the signing of the settlement with CPS' documentation. Is there -- do you see any scenarios where there is anymore material changes to the terms of the overall deal or is this really just kind of a little stock?

Jonathan, the way I would describe it being 100% candid is I don't think -- the changes to the financial terms that you've seen that they actually went public with and then we confirmed, I don't see any changes to those terms. Having said that, there are other legal/business terms that are significant enough that they could hold up or actually derail a settlement that could arise but you won't -- I don't -- I can't anticipate that you would see any change to the numbers that have been put into the public by both sides.

Thank you. If I could just follow up with one other related topic? You have obviously a much lower kind of assumption around financing of your gross growth CapEx. Is there other scenarios which -- where that financing element could grow during the course of the year as you hit some milestones along the way with the project or is that really kind of further out in time?

I'm not sure we are following what you are referring to, to be frank.

As we look at your gross -- the growth investments number and then the estimated project funding, so obviously the project funding is down a couple hundred million dollars, whereas you are investing more at the gross level in the cash flow forecast.

Yes.

What are the prospects for that 180 of project funding that you canceled in for 2010 moving up again this year or is $600 million of net funding requirement pretty much a fixed number at this point?

Yeah, I would say one of the problems with doing the free cash flow when it comes to growth CapEx is that the relative success of projects that you would apply that growth CapEx. Again your success in selling down those projects, it is all pretty speculative. So about the only thing I can tell you is that this is sort of our best estimate at the time. It could go up or down, definitely not fixed.

Thank you.

Okay. Operator, I actually think will take two more calls quickly or to keep everyone on time today, so.

Your next question is Michael Lapides, Goldman Sachs. Please go ahead.

Hey David, one question, looking at the coal plant retirement analysis that you put out, I am just curious. Do you expect to see coal plant retirements in any of the following three regions, in Texas, in upstate New York, or in PJM East?

Go ahead, Mauricio.

Yeah, Michael. This is Mauricio. We don't expect to see anything on Texas. Most of the analysis that we did, I'm going to say probably about 40 gigawatts to 45 gigawatts are concentrated in the CERT region and MISO. About 10 to 11 gigawatts are split between PJM New York and New England and the lion's share of that is going to be PJM. So that's how I would characterize it, I guess the split on potential coal retirements. Now, keep in mind that this is just based on merchant economics and depending on the system or grid reliability, you may or may not be able to retire those coal units.

Okay. So when we think about your asset base and your portfolio and what would benefit significantly from a rash of coal plant retirements, I mean, it strikes me that maybe Keystone and Conemaugh because they've already got controls, but your eastern plants would -- what's left of Indian River wouldn't necessarily benefit. Really then it comes down to gas plant spread in the upper northeast.

Yes. I mean, the direct impact probably is going to be primarily Keystone and Conemaugh, our share. And I think you probably are going to see some increasing capacity prices in New York, possibly New England. Now, the indirect effect is going to depend on power flows, so if you require a significant number of coal in MISO and CERT, how will that change the power flow dynamics? That could potentially have an indirect impact, but that is going to be primarily on energy, not necessarily on capacity.

Okay, guys. Thank you, much appreciated.

Thank you, Michael.

In the interest of time, we are only able to take one last question. That is the question from Angie Storozynski, Macquarie Capital. Please go ahead.

Thank you. It's actually Angie Storozynski from Macquarie.

Angie, we know who you are.

I know, but I just wanted to make sure. I keep hearing those different versions of my company's name and so I just needed to finally pronounce it correctly. Anyway, for 2010, I remember that you referred to potential improvements to your guidance and you are saying that you are working on it. Could you maybe say, is it cost cutting? Is it a certain region where there's upside coming? Any comments?

Well, the only comment I'd have is it would be all of the above. We were not happy to put out 2010 guidance that was significantly lower than what we were going to achieve in 2009. And so we've been at work on the year on the cost cutting and also obviously looking where we can improve the performance in terms of more topline performance. I think that the commodity price environment since we gave the -- I mean, I think we've made actually significant progress, but the commodity price environment since we sort of announced guidance in the first place has not helped. So the commodity price environment has not helped. The weather has helped this winter. So it's definitely too early to say whether we're going to be successful in bringing up 2010. And to be frank, Angie, I would doubt that we are going to change any viewpoint on it on the first quarter call, but we are working on it. And if the market would give us some breaks, I think we could be successful.

Okay. Just a question or a statement, there were some -- there was a question about your M&A activities. I certainly hope that you are still suffering from the M&A fatigue that you mentioned back in '09. It was a tough year. And I understand that you have a lot of cash or you generate a lot of cash and that there are other IPP players out there that may seem to be cheap. But I just wanted the reassurance from you that you understand your stock is a very cheap currency right now and while maybe others do not look cheap at first glance, that -- or they look cheap at first glance, they are really not that cheap and that's definitely not a focus of your company for this year. Is that correct?

Angie, I'm glad you got that, is that correct at the end, because I was sensing, because I am such a smart, perceptive guy, that there was a point of view hidden in that question but no, you are completely right. And to Lasan's question, I mean because Lasan had me focused on the significant cash. I am glad you prompted me because the fact that our stock from our perspective is grossly undervalued and is not a particularly attractive acquisition currency to use at this price is something we are aware of, particularly in terms of the type of transactions that Lasan was talking about. In our business, as I've often said, if you have a lot of cash, you can sort of try and pick off one asset or a couple of assets. But when you look at the sort of combination of two IPP companies like the other companies in the industry, no one's ever going to have enough cash to do that. So you have to be using your stock. And having our stock mired in the trading range, it has been mired in, believe me it is absolutely not an inducement to use that stock to buy something. So --

Thank you so much. Okay.

Did you have another point of view that you wanted me to express?

Well, maybe off-line then.

Okay. I know you are never bashful, Angie and we look forward to your thoughts. So operator, Geena, I think we're done here. We appreciate everyone being patient. Sorry the call went long, but there was a lot to talk about. We look forward to talking to you on our first quarter call. Thank you very much.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.