Good day, ladies and gentlemen, and welcome to NRG's First Quarter 2011 Earnings Conference Call. My name is Laura, and I will be your operator for today. [Operator Instructions] I would now like to turn the conference over to your host for today, Nahla Azmy, SVP, Investor Relations. Nahla, please proceed.

Thank you, Laura. Good morning, and welcome to our First Quarter 2011 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 the 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. 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 this press release and this conference call. In addition, please note that the date of this conference call is May 5, 2011, 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 financial results. For complete information regarding our non-GAAP financial information and the most directly comparable GAAP measures and a quantitative reconciliation of those 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 let me add my good morning, and welcome to Nahla’s. Today, I'm joined here by Mauricio Gutierrez, the company's Chief Operating Officer; and Chris Schade, the company's Chief Financial Officer, and they will also be giving part of the presentation. We're also joined by Chris Moser, who runs the company's Commercial Operations; and Jason Few, who runs the Reliant Energy, and both will be available to answer any specific questions that you have in their area. As all of us here are cognizant of the fact that we took up a good deal of your time just a couple of weeks ago discussing the STP 3&4 situation in light of the event in Japan, our prepared remarks today are going to be unusually brief. I'm also going to be referring to a slide deck, which I think is available on the website. So as illustrated on Slide 3, to put it quite simply, we had a very good result in the first quarter of 2011, $455 million of adjusted EBITDA, ahead of our expectations and even when adjusted for seasonality, a good start in our objective of achieving or even exceeding our full-year guidance range. Our better-than-expected financial performance was underpinned by a very robust operational and commercial performance by both our core generation business and our 2 retail energy providers, Reliant Energy and Green Mountain Energy. This robust performance was achieved notwithstanding long bouts of extreme winter weather experienced across our geographic footprint. While I know that the conventional wisdom is that wholesale generators are expected to do well financially during periods of extreme weather, what we found during the weather events that gripped the Texas market in early February is that there is often a divide between net expectation and reality. Reality depends on…

Thank you, David, and good morning, everyone. Turning to Slide 7. Now, we're off to a positive start in 2011 with both our Wholesale and Retail businesses delivering strong operating performances during the first quarter. As David mentioned, EPA provided much awaited clarity around environmental rules affecting our generation portfolio. I will discuss those proposed rules in more detail in a moment. But the key takeaway is that we do not expect at this time any additional environmental CapEx beyond what we have previously announced. With respect to our projects on the construction, the Middletown project is in the final commissioning phase and we expect these units to reach commercial operation in June. The Indian River Back-End Control project and the El Segundo Energy Center Repowering project are progressing according to schedule. Finally, the Ivanpah Concentrated Solar Power project in California has started construction work, and it is expected to be fully operational in 2013. As we have said in the past, the strong commitment to safety is a foundation to achieve superior operating results. And the first quarter of this year is a clear example of that. Starting with safety on Slide 8. Our OSHA recordable rate of 0.66 was well within top decile in our industry, making it one of our best quarters ever. We have 35 sites out of 39 without a recordable injury in this first quarter. Our overall net generation increased by 1.2 terawatt-hours, driven primarily by higher generation in Texas led by STP and the addition of Cottonwood to our subcentral portfolio. Generation in the Northeast was adversely impacted by lower coal dispatch in February and March. Our baseload plants performed exceptionally well, improving on last year's availability and reliability metrics, particularly when needed the most during the severe weather event that struck Texas…

Thanks, Mauricio. Beginning with the financial summary on Slide 14. We are pleased with our strong first quarter results of adjusted EBITDA of $455 million and cash from operations of $216 million. Reliant Energy continued to perform well and contributed $151 million of adjusted EBITDA in the first quarter. Compared to the first quarter of 2010, Reliant's Q1 2011 results were approximately $40 million less and largely explained by a combination of lower volume sold and lower unit margins on both newly acquired and customer renewals. As Mauricio also discussed, since acquiring Reliant, a primary goal has been to limit customer attrition and create new customer growth through a strategy of enhanced services and offerings. During the first quarter and as a direct result of these efforts, Reliant experienced favorable mass customer growth with the addition of 11,000 new customers since year-end 2010. During Q1, our Wholesale Generation business contributed $304 million of adjusted EBITDA, an approximate $100 million decline compared to Q1 2010. Texas wholesale generation contribute $235 million of adjusted EBITDA, a strong performance in light of the challenging commodity markets but weaker than Q1 2010. The quarter-on-quarter decrease was caused by a combination of lower realized energy prices based on lower hedged prices and higher fuel transportation costs, which drove a 15% decline in realized margins per megawatt hour. Offsetting these declines were favorable quarter-on-quarter operating expenses of $14 million. In the Northeast region, adjusted EBITDA declined $66 million due to a lower gross margin driven by a 25% decline in coal generation, lower hedged prices and a decrease to capacity revenues due to the expiration of RMR contracts in certain of our Connecticut plants, as well as lower realized LFRM prices and volumes. These decreases were partially offset by lower operating cost of $28 million as…

Thank you, Chris. And before we open the floor to questions. Just one summary remark. We've been asked many times over the past few weeks whether we plan any new strategic initiatives to take the place of nuclear development. And the short and simple answer to that question is no. Our strategy was and still is a multi-pronged growth strategy incorporating many initiatives, which are designed to capitalize on what we see as being very attractive opportunities opened to the 21st century power companies. We think if we successfully execute on these initiatives, we will substantially enhance the shareholder value in the years to come. The dimmed prospect for the nuclear renaissance in the United States either have not affected our other initiatives or in some cases, they've actually enhanced the attractiveness of these other opportunities. So our plan, quite simply, is to redeploy the time, energy and resources we were putting into new nuclear developments into a near -- people at NRG know that I'm a big fan of alliteration into the 4 Rs of renewables, repowerings, retail and repurchases. So with that, Laura, we'd be happy to answer any questions that people have.

[Operator Instructions] Your first question comes from the line of Brandon Blossman from Tudor, Pickering, Holt & Co. Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc.: So I know you've covered this in your prepared comments but more details on growth plans in conventional and renewables.

I'm sorry, Brandon. The question is of what our growth plans are in conventional and renewables? Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc.: Yes. You noted more details in the second quarter. You also noted that the STP being off the table doesn't change any plans, but you're at least reviewing your brownfield opportunities.

Well, Brandon, just -- I mean, we have -- the main thing in the renewables front is we don't have any new initiatives in terms of onshore wind. We have NRG Bluewater that's pursuing offshore, but that's a long process still I think. It's overwhelmingly when you focused on solar, and we have this pipeline that we think will go into construction, we'll use the benefits of the cash ITC program that's available through the remainder of this year. As I mentioned, that's close to 1,000 megawatts. Beyond that, we have a development pipeline. It's earlier stage and so things can come and go, but that can be another couple thousand megawatts over the next few years. So we're going to have a lot of focus on that area. To date, that has been out in the southwest United States. We are looking to get more involved in solar further East, I mean, certainly in Texas but also actually in the East. But that's still a work in progress. On the conventional side, one of the things that we think is going to come about obviously is that we've had sort of a reversal in terms of solid fuel baseload. While clearly, the prospects for a nuclear development in the country outside of the deep South have dimmed substantially. And now that we have much greater clarity about coal-fired generation because of the promulgation of the EPA rules, we at least have a sense of what's going to happen in that market and you can actually price opportunities and you can price gas as an alternative. We have a lot of great sites around the company in the Northeast and Texas and the West Coast. The transmission system depends upon power from a lot of our sites. So we have mainly a brownfield development, redevelopment effort at many different sites around the country, and I think we're going to be re-evaluating that and see if we can get more plants permitted. But I think with where our market prices are, we are currently operating on the assumption that anything we do is going to benefit one way or another from a long-term offtake arrangement. And we'll try to be more specific on the second quarter call because there are live projects that we think will have greater certainty by that time. Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay, looking forward to that. And then just as a follow-on. Any incremental updates on I guess equity sell down in the larger solar projects?

Chris?

Brandon, it's a process we just recently started and kicked off, so there's really no update. It's ongoing. The responses we've received from the initial potential investors we've seen has been very positive. But we expect it's going to go on through the rest of this quarter into the early part of the third quarter and we'll update it then.

Your next question comes from the line of Angie Storozynski from Macquarie Capital.

I wanted to ask about your environmental CapEx. So your assessment is that you'll still see 30 to 40 gigawatts of coal plant retirements on the back of those new EPA regulations, and yet you no longer see any additional CapEx that is required for your coal plants. Could you comment in particular with regards to your Northeastern assets?

Angie, this is Mauricio. As you know, Huntley and Dunkirk and Indian River, they have been under constant degree [ph]. We have already made significant investments on those facilities. We believe that the back-end controls that we have installed in Huntley and Dunkirk or that we're installing in Indian River will be sufficient to comply with those rules. When we say 30 and 40 gigawatts, we really think that Eastern coal generators will have to install either significant environmental control equipment or retire. So whether we see that happening Midwest, Southeast and Mid-Atlantic, we think that, that's where the majority of the impact is going to be felt. So I think on our environmental CapEx, we really are focusing on controlling mercury to ACIs and for vacation [ph] needs of fabric filters to control mercury and SO2. And we think that with that, we will be able to comply with the rules.

Angie, I just really want to emphasize because I know you're aware of this, but maybe not everyone in the call is as familiar as you are with this industry. But I just want to reiterate Mauricio's assessment that the rules that came down, I mean, you hear a lot of different noises from the industry about the EPA rules. Some people would say they are extremely harsh, others who say that they're workable and it really comes down to a Western coal versus an Eastern coal situation. And I'd like to take credit for it. But even before I was here 7 years ago, the decision to move the coal plants of NRG from Eastern coal to Western coal seems to have paid off in this situation. So it is all about these Eastern coal plants. And Mauricio, we're in a situation here with our fleet where we're not using much Eastern coal at all. Is that right?

Right. I mean, what is left is Indian River 4 and that is less than 5% of the total coal that we consume now in our fleet.

Okay. Now, given the drop-off in earnings in the Northeast. I understand the RMR contract expired there and that was the biggest year-over-year driver. But is there, I mean, is there anything that you can actually do to either renew these contracts or is it just retire the facilities?

Well, Angie, I mean, 2 things. One, we had a warmer than normal February and March that really impacted the generation of power coal fleet in West New York. We're constantly evaluating the profitability of our plants. We think that the market is starting to rebound. We're going to go into the second quarter and third quarter where higher capacity prices and going into the summer will increase the profitability of our plants.

Angie, can I just add though because you make a very good point which I think is one of the most interesting areas in the country in terms of the future of power generation mix is the Northeast. Because if you look at it, I mean, we actually performed pretty well. I mean, in terms -- the fact that our EBITDA result in the Northeast went from $77 million last year to $10 million is not because of a weak performance of our units. It's because that's what we got out of the marketplace in the quarter. And the Northeast fleet is older than the rest of the country's fleet and I think there's just a lot of question about what going to be the power generation in the future. But if someone like us with several thousand megawatts manages to extract $10 million in EBITDA, it's not a sustainable situation long-term.

[Operator Instructions] Your next question comes from the line of Gregg Orrill from Barclays Capital.

I know you talked about the refinancing you're looking to do and how that would help you to allocate capital more efficiently. Is there anything specifically within your strategy that you feel that the way things are now is preventing you from doing? And maybe also within the context of the big cash balance that you have.

Well, Greg, I mean, I may be misunderstanding your question but I mean there's nothing that I know of in the covenant package that's really and unduly restrictive in terms of reinvesting in the business. It's all -- because I feel that in the scheme of things, we've been very disciplined in that approach. The company has accumulated this large cash balance and as a high cost of capital company, it's clearly inefficient for us to be holding that amount of cash on our balance sheet. So really the only constraint that we're trying to relieve right now is our ability to return that capital to shareholders at this share price, through our share buyback. But if we were at a more reasonable share price, there are other ways of returning capital to shareholders. Chris, if you will.

That's correct. And until we relieve the restrictions into the outstanding indentures governing the 2016 and '17 maturities, we're going to be prohibited from returning much more than the $180 million that we've currently announced for this year, perhaps maybe more in the margin. But the relief that we're going to get in the new maturities, which will mirror the indentures that we have and the other outstanding and new early issued bonds, is quite significant and allow us to look quite holistically at capital allocation across the...

And then maybe a quick follow-up. How much would step B of the refinancing cost you in terms of calling the senior notes?

Well, the call premium is 103 in 5 days [ph] roughly on the 2016. So on $2.4 billion, that would be the call premium there which is roughly $85 million of call premium that we would pay. The 2017s are yet callable. There was a make-up [ph] call which is depending on the day you choose treasuries of about 110 versus the call that comes due in January of 2012, about 103 in 5 days. So there's a significant difference between getting at the 2017s now and waiting for the call period in 9 months from now, which we expect to do. So that would be -- and that issue in 2017 is at $1.1 billion.

Your next question comes from the line of Jay Dobson from Wunderlich Securities.

David, I was wondering if maybe Mauricio could talk in a little more detail about the Texas impact on both retail and wholesale from February 4?

I'm sure he would love to, Jay. Mauricio?

Well, I mean, I think we've been quite public about the excellent performance of our fleet during those days and the price spikes that happened, which basically demonstrates how competitive markets work. On the retail side, the convention is that during these events, retail providers tend to be heard. In our case, through the hedge profile that we have provided to Reliant, they were no longer insulated on February 2 but to some extent benefited by the sudden decrease of our power prices following these events, with higher loads that were maintained because of our coal [ph] prices. So I think exactly on the days that happened, our Generation portfolio was ready to be deployed and in the aftermath where power prices decrease significantly, the Retail portfolio out-performed [ph]. But keep in mind that the result of our presenting, yes, I mean, the February 2 events held but this is in prior quarter results.

Okay, fair enough. So I'm trying to get my head around sort of $1 impact of either in retail and wholesale or aggregating the 2 together. You're suggesting the positive impact would be small.

Well, let me just answer that by saying I don't even know a specific dollar impact to that event and so if I don't know, we're not going to tell you what exactly it is. But in the scheme of the quarter, I don't think it was a significant number. But it's always better on any given day to make more money than you lose. So we're pleased with the outcome on that day. But we don't have a specific number from the ISO event itself that we can give you.

Okay, great. And then just on Green Mountain. No, it's not the biggest piece of your business but you lumped it into corporate, just what the adjusted EBITDA contribution was?

We said that Green Mountain would contribute $70 million to $80 million of EBITDA for the full year and their performance during the first quarter was good, and there's no reason to think that we will not be within that range at the end of the year.

Okay, fair enough. And then lastly, Chris, just the capacity under the RP basket at the quarter end?

About $50 million. So we completed the $130 million, we said $180 million. So we have the $50 million remaining which we'll get to in short order.

Our next question comes from the line of Julien Dumoulin-Smith from UBS.

I want to find out with respect to the Ivanpah project, there's been some headlines out there about the BLM recent decision to partially suspend construction of the project at least on, I believe, 2 of the 3 units or sites? Do you mind commenting with respect to how that might shift in service of the total project?

Well, Julien, there's no shift yet. I mean, the important thing as you say is on 2 of the 3 sites and that the most active -- I mean, like most good developments, Ivanpah was being built in a staggered approach. Ivanpah 1 first and then 2 and 3. And most of the activity, not all of the activity but most of the activity is around Ivanpah 1 which was not affected by the BLM action. And we believe and hope that, that action is just going to have a short-term impact on the day to day schedule. And at this point, there's no reason to think that the overall schedule is going to change at all.

Great. Exactly what I thought. And then secondly, with regards to NRG's decision to join MISO, I'd be very curious if you have any kind of read on what that would do for your own portfolio in the region, specifically, as it relates to potential capacity payments, et cetera.

Well, I'm not sure that we're in a position yet to talk about specific capacity payments. I mean, I'll hand the floor over to Mauricio and I'm pretty sure he won't answer the question either. But I would say that overall, the decision to actually answer MISO is we think is significantly positive decision for our portfolio, but we're not getting excited about it. Too early because we've seen in the past that this can take several years to actually happen. So really anything that we said would be pretty speculated, would be pretty far out in the future. Mauricio, do you want to obfuscate around that further?

I mean, I would say that I think it's too early to tell and in general, we like organized markets where there is clear transparency on transmission and dispatch and clearly NRG moving to MISO you say it's a positive development for our portfolio. And you already mentioned on the capacity markets, I mean, I think show the characteristics of a proven organized market are going to be positive for our South Central region.

Great. And a very quick last question. You have a substantial cash balance, talk about refinancing the senior notes here. Is there a potential that you would use cash on the balance sheet as part of the refinancing plans, if you will? Or would you just basically refinance the dollar for dollar both of the 16 and 17?

No, I think we're certainly looking to putting some cash towards the refinancing. I think to accomplish 2 things. One perhaps just to reduce overall leverage in maintaining our good balance sheet targets. And second, to relive any potential sort of reaching [ph] costs on refinancing lumpy tranches to try to remove some of the market risk that might exist around some very largely-sized tranches in any given maturity.

Your final question comes from the line of Ameet Thakkar from Bank of America Merrill Lynch.

Looks like you guys highlighted the Old Bridge project as a potential opportunity and then I guess in your presentation told, you kind of refer to the FERC ruling on the Melper [ph] provision. I guess how do you guys view [indiscernible] the project given the recent ruling by the FERC [indiscernible] supporting them over?

Well, I think, Ameet, and again I'll ask Mauricio if he wants to amplify anything I say. But I think essentially the way we look at it is first of all, we support the FERC ruling. We think it's good for capacity markets throughout the Northeast. So it's a positive precedent. In terms of the impact on Old Bridge, obviously, there's a lot more water that's going to flow down the river on that with the disputes between the state and FERC and the litigation and all. But from our perspective, we feel a low cost option to proceed with the Old Bridge award if it makes sense to do so. And we'll just see how it plays out over the next year. Mauricio, do you want to add to that?

No. I think that’s…

But it's very hard for us to predict specifically the way it's all going to pan out, but the burn rate in terms of the development of that project is quite low relative to other things that we are doing and have done in the past. So we're very pleased with where we sit. And Ameet, as I think we've said many times, to the extent that there are weaknesses in our portfolio, we would like to have more based intermediate load generation in PJM, particularly in Eastern PJM. So it was an attractive opportunity for us.

Understood.

So operator, with that, I think we will call it a day. We appreciate everyone taking the time to participate in this call. We look forward to talking to you on the second quarter call if not before. Thank you very much.

That concludes today's conference. You may now disconnect. Thank you for your participation.