Reliant Energy Reports Second Quarter Results

HOUSTON, Aug. 2 /PRNewswire-FirstCall/ -- Reliant Energy, Inc. reported open EBITDA of $193 million for the second quarter of 2007, compared to $258 million for the second quarter of 2006. Improved wholesale open contribution margin due to higher energy margins was more than offset by lower retail contribution margin. Retail contribution margin declined due to lower unit gross margins and reduced volumes, primarily due to milder weather. Adjusted EBITDA, which includes the effect of historical and operational wholesale hedges and gains on sales of emission allowances, was $165 million for the second quarter of 2007, compared to $174 million for the second quarter of 2006.

"This quarter has been marked by significant progress in implementing the strategic plan that we announced in March," said Mark Jacobs, president and chief executive officer. "The completion of the first phase of our comprehensive refinancing plan is a major step in creating the capital structure to support our business objectives in the future. In addition, results of the recently announced PJM capacity auction have reinforced our view that tightening supply and demand fundamentals will continue to improve the outlook for our wholesale business."

Open EBITDA was $307 million for the first six months of 2007 compared to $303 million for the same period of 2006. Adjusted EBITDA was $246 million for the first six months of 2007 compared to $250 million for the same period of 2006. During the first six months of 2007, the company reported free cash flow used in continuing operations of $142 million, compared to $116 million for the same period of 2006.

On a GAAP basis, the loss from continuing operations before income taxes was $456 million for the second quarter of 2007, compared to income from continuing operations before income taxes of $39 million for the same period of 2006. The second quarter 2007 loss from continuing operations before income taxes includes net unrealized losses from energy derivatives of $326 million and a $71 million charge for debt extinguishment premium and consent fees. Income from continuing operations before income taxes for the second quarter of 2006 includes $52 million of net unrealized gains from energy derivatives. Interest expense in the second quarter of 2007 includes the amortization of $42 million of deferred financing costs, including $39 million related to the June refinancing, compared to $4 million for the same period of 2006.

On a GAAP basis, the loss from continuing operations before income taxes for the first six months of 2007 was $44 million, compared to $42 million for the same period of 2006. The reported numbers include net gains from unrealized energy derivatives of $196 million and $75 million, respectively, for 2007 and 2006. The 2007 loss from continuing operations before income taxes includes a $71 million charge for debt extinguishment premium and consent fees and a $22 million charge for western states and similar settlements. During the first half of 2007, the company reported cash provided by continuing operations from operating activities of $24 million, compared to a $115 million use of cash in continuing operations from operating activities for the same period of 2006.

OUTLOOK

Reliant Energy's outlook for open EBITDA is $1,012 million, $1,420 million and $1,494 million for the years ending December 31, 2007, 2008 and 2009, respectively. Adjusted EBITDA, which includes the impact of historical and operational wholesale hedges and gains on the sales of emission allowances, net is $897 million, $1,336 million and $1,417 million for the same periods. The outlook for free cash flow provided by continuing operations is $231 million, $595 million and $869 million for the years ending December 31, 2007, 2008 and 2009, respectively.

This outlook is based on forward commodity prices as of June 22, 2007, and assumptions and estimates by Reliant Energy.

Open EBITDA Outlook Reconciliation ($ millions) 2007E 2008E 2009E Income (loss) from continuing operations before income taxes ($6) $540 $803 Unrealized (gains) losses on energy derivatives 58 108 (15) Western States and similar settlements 22 --- --- Debt extinguishment premium and consent fees 73 --- --- Depreciation and amortization 423 458 459 Interest expense, net * 327 230 170 Adjusted EBITDA $897 $1,336 $1,417 Historical and operational wholesale hedges 117 84 77 Gains on sales of assets and emission allowances, net (2) --- --- Open EBITDA $1,012 $1,420 $1,494 * Reduced by $5, $20 and $37 million for 2007E, 2008E and 2009E, respectively for capitalized interest. 2007E includes $39 million amortization of deferred financing costs associated with completion of phase one of comprehensive refinancing plan during the second quarter. Free Cash Flow from Continuing Operations Outlook Reconciliation ($ millions) 2007E 2008E 2009E Operating cash flow from continuing operations * $728 $1,187 $1,262 Change in margin deposits, net (244) (100) (31) Western States and similar settlements payments 57 --- --- Adjusted cash flow provided by continuing operations $541 $1,087 $1,231 Capital expenditures ** (229) (337) (213) Emission allowances activity, net (81) (155) (149) Free cash flow provided by continuing operations $231 $595 $869 * Outlook assumes no changes in working capital. ** Includes capitalized interest of $5, $20 and $37 million for 2007E, 2008E and 2009E, respectively. NON-GAAP FINANCIAL MEASURES

This press release and the attached financial tables include the following non-GAAP financial measures:

Retail gross margin* Open energy gross margin Open wholesale gross margin Retail contribution margin Wholesale open contribution margin EBITDA Adjusted EBITDA Open EBITDA Adjusted cash flow provided by (used in) continuing operations Free cash flow provided by (used in) continuing operations Net debt

A reconciliation of these financial measures and the most directly comparable GAAP measures is included above or in the attached financial tables. Additional information regarding these measures, including a discussion of their usefulness and purpose, is included in the Form 8-K furnished along with this press release. Certain factors that could affect GAAP financial measures are not accessible on a forward-looking basis, but could be material to future reported earnings and cash flows.

* Previously titled "adjusted retail gross margin." WEBCAST OF EARNINGS CONFERENCE CALL

Reliant Energy has scheduled its second-quarter 2007 earnings conference call for Thursday August 2, 2007, at 10 a.m. CT. Interested parties may listen to a live audio broadcast of the conference call at http://www.reliant.com/ in the investors section. A replay of the call can be accessed approximately two hours after the completion of the call. A copy of the presentation accompanying the call is also available at this Website address.

Reliant Energy, Inc. based in Houston, Texas, provides electricity and energy services to retail and wholesale customers in the United States. In Texas, the company provides service to approximately 1.9 million retail electricity customers, including residential and small business customers and commercial, industrial, governmental and institutional customers. Reliant also serves commercial, industrial, governmental and institutional customers in the PJM (Pennsylvania, New Jersey and Maryland) market.

The company is one of the largest independent power producers in the nation with approximately 16,000 megawatts of power generation capacity across the United States. These strategically located generating assets utilize natural gas, fuel oil and coal. For more information, visit http://www.reliant.com/.

This news release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that contain projections, estimates or assumptions about our revenues, income and other financial items, and our plans and objectives for future operations or about our future economic performance, transactions and dispositions and financings related thereto. In many cases you can identify forward-looking statements by terminology such as "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan," "potential," "predict," "should," "will," "expect," "objective," "projection," "forecast," "goal," "guidance," "outlook," "effort," "target" and other similar words. However, the absence of these words does not mean that the statements are not forward-looking.

Actual results may differ materially from those expressed or implied by forward-looking statements as a result of many factors or events, including, but not limited to, legislative and regulatory developments, the outcome of pending lawsuits, governmental proceedings and investigations, the effects of competition, financial market conditions, access to capital, the timing and extent of changes in commodity prices and interest rates, weather conditions and other factors we discuss or refer to in the "Risk Factors" section of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Each forward-looking statement speaks only as of the date of the particular statement and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Reliant Energy, Inc. and Subsidiaries Consolidated Statements of Operations (Thousands of Dollars, except per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2007 2006 2007 2006 Revenues: Revenues (including $(10,848), $52,393, $3,722 and $201,899 unrealized gains (losses)) $2,649,915 $2,774,903 $5,012,516 $5,227,588 Expenses: Purchased power, fuel and cost of gas sold (including $(315,497), $(364), $192,162 and $(126,402) unrealized gains (losses)) 2,475,716 2,233,908 3,919,207 4,483,957 Operation and maintenance 233,966 229,975 464,707 415,530 Selling, general and administrative 103,084 91,690 190,681 162,430 Western states and similar settlements - - 22,000 - Gains on sales of assets and emission allowances, net (1,727) (4,854) (1,727) (156,330) Depreciation and amortization 110,603 91,092 202,572 171,597 Total operating expense 2,921,642 2,641,811 4,797,440 5,077,184 Operating Income (Loss) (271,727) 133,092 215,076 150,404 Other Income (Expense): Income of equity investment, net 1,366 2,061 2,526 2,387 Debt extinguishment premium and consent fees (71,269) - (71,269) - Other, net (574) 744 494 829 Interest expense (121,975) (103,444) (209,045) (211,606) Interest income 8,232 6,877 18,696 15,895 Total other expense (184,220) (93,762) (258,598) (192,495) Income (Loss) from Continuing Operations Before Income Taxes (455,947) 39,330 (43,522) (42,091) Income tax expense (benefit) (174,884) 16,603 (22,822) 74,249 Income (Loss) from Continuing Operations (281,063) 22,727 (20,700) (116,340) Loss from discontinued operations (1,889) (8,551) (3,541) (3,571) Income (Loss) Before Cumulative Effect of Accounting Change (282,952) 14,176 (24,241) (119,911) Cumulative effect of accounting change, net of tax - - - 968 Net Income (Loss) $(282,952) $14,176 $(24,241) $(118,943) Basic Earnings (Loss) Per Share: Income (loss) from continuing operations $(0.82) $0.07 $(0.06) $(0.38) Loss from discontinued operations (0.01) (0.02) (0.01) (0.01) Cumulative effect of accounting change, net of tax - - - - Net income (loss) $(0.83) $0.05 $(0.07) $(0.39) Diluted Earnings (Loss) Per Share: Income (loss) from continuing operations $(0.82) $0.07 $(0.06) $(0.38) Loss from discontinued operations (0.01) (0.02) (0.01) (0.01) Cumulative effect of accounting change, net of tax - - - - Net income (loss) $(0.83) $0.05 $(0.07) $(0.39) Weighted Average Common Shares Outstanding (in thousands): - Basic 342,074 306,780 340,717 306,208 - Diluted 342,074 342,592 340,717 306,208 Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006. Reliant Energy, Inc. and Subsidiaries Results of Operations by Segment - Adjusted and Open (Millions of Dollars) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 Change 2007 2006 Change Retail Energy: Revenues $1,994 $2,217 $(223) $3,695 $3,904 $(209) Purchased power 2,117 1,836 281 3,026 3,530 (504) Unrealized (gains) losses on energy derivatives 360 (34) 394 (256) 30 (286) Gross margin - Retail Energy (1)(2) 237 347 (110) 413 404 9 Operation and maintenance 60 58 2 121 109 12 Selling and marketing 30 30 - 60 54 6 Bad debt expense 21 22 (1) 38 36 2 Contribution margin - Retail Energy 126 237 (111) 194 205 (11) Unrealized gains (losses) on energy derivatives (360) 34 (394) 256 (30) 286 Contribution margin, including unrealized gains/losses on energy derivatives (3) (234) 271 (505) 450 175 275 Wholesale Energy: Revenues $797 $698 $99 $1,545 $1,609 $(64) Purchased power 500 538 (38) 1,121 1,240 (119) Historical and operational wholesale hedges 30 89 (59) 63 209 (146) Unrealized (gains) losses on energy derivatives (34) (18) (16) 60 (105) 165 Open gross margin - Wholesale Energy (1) 293 231 62 547 473 74 Operation and maintenance 175 173 2 345 307 38 Bad debt expense - - - (1) (3) 2 Open contribution margin - Wholesale Energy 118 58 60 203 169 34 Historical and operational wholesale hedges (30) (89) 59 (63) (209) 146 Unrealized gains (losses) on energy derivatives 34 18 16 (60) 105 (165) Contribution margin, including historical and operational wholesale hedgesand unrealized gains/losses on energy derivatives (3) 122 (13) 135 80 65 15 Other Operations: Revenues $4 $- $4 $7 $1 $6 Purchased power - - - - - - Operation and maintenance - - - 1 - 1 Contribution margin - Other Operations (3) 4 - 4 6 1 5 Eliminations: Revenues $(145) $(140) $(5) $(235) $(286) $51 Purchased power (141) (140) (1) (228) (286) 58 Operation and maintenance (2) - (2) (3) - (3) Total (2) - (2) (4) - (4) Consolidated: Contribution margin - Retail Energy 126 237 (111) 194 205 (11) Open contribution margin - Wholesale Energy 118 58 60 203 169 34 Contribution margin - Other Operations 4 - 4 6 1 5 Eliminations (2) - (2) (4) - (4) Total 246 295 (49) 399 375 24 Other general and administrative (54) (40) (14) (95) (75) (20) Income of equity investment, net 2 2 - 3 2 1 Other, net (1) 1 (2) - 1 (1) Open EBITDA 193 258 (65) 307 303 4 Historical and operational wholesale hedges (30) (89) 59 (63) (209) 146 Gains on sales of assets and emission allowances, net 2 5 (3) 2 156 (154) Adjusted EBITDA 165 174 (9) 246 250 (4) Unrealized gains (losses) on energy derivatives (326) 52 (378) 196 75 121 Western states and similar settlements - - - (22) - (22) Debt extinguishment premium and consent fees (71) - (71) (71) - (71) EBITDA (232) 226 (458) 349 325 24 Depreciation and amortization (110) (91) (19) (202) (172) (30) Interest expense (122) (103) (19) (209) (211) 2 Interest income 8 7 1 18 16 2 Income (loss) from continuing operations before income taxes $(456) $39 $(495) $(44) $(42) $(2) (1) Gross margin (revenues less purchased power, fuel and cost of gas sold) excludes depreciation, amortization, labor and other product costs. (2) Previously titled "adjusted retail gross margin" or "retail energy gross margin, excluding unrealized gains/losses on energy derivatives." (3) Segment profit or loss measure. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006. Reliant Energy, Inc. and Subsidiaries Consolidated Balance Sheets (Thousands of Dollars) June 30, 2007 December 31, 2006 ASSETS (Unaudited) Current Assets: Cash and cash equivalents $165,994 $463,909 Restricted cash 5,334 24,980 Accounts and notes receivable, principally customer, net of allowance of $31,894 and $33,332 1,288,726 1,043,637 Inventory 283,768 275,437 Derivative assets 320,847 489,726 Margin deposits 323,469 452,605 Accumulated deferred income taxes 262,979 279,479 Prepayments and other current assets 173,968 141,016 Current assets of discontinued operations - 2,460 Total current assets 2,825,085 3,173,249 Property, plant and equipment, gross 7,257,694 7,192,437 Accumulated depreciation (1,576,153) (1,450,442) Property, Plant and Equipment, net 5,681,541 5,741,995 Other Assets: Goodwill 379,644 381,594 Other intangibles, net 410,495 423,745 Derivative assets 180,256 203,857 Accumulated deferred income taxes 109,458 87,858 Prepaid lease 257,556 264,328 Other 239,138 290,507 Total other assets 1,576,547 1,651,889 Total Assets $10,083,173 $10,567,133 LIABILITIES AND EQUITY Current Liabilities: Current portion of long-term debt and short-term borrowings $381,011 $355,264 Accounts payable, principally trade 845,316 664,630 Derivative liabilities 841,538 1,164,809 Margin deposits - 16,490 Other 405,462 488,764 Current liabilities of discontinued operations 1,828 3,286 Total current liabilities 2,475,155 2,693,243 Other Liabilities: Derivative liabilities 282,945 420,534 Other 308,471 324,145 Total other liabilities 591,416 744,679 Long-term Debt 2,987,441 3,177,691 Commitments and Contingencies Temporary Equity Stock-based Compensation 2,620 1,647 Stockholders' Equity: Preferred stock; par value $0.001 per share (125,000,000 shares authorized; none outstanding) - - Common stock; par value $0.001 per share (2,000,000,000 shares authorized; 342,425,141 and 337,623,392 issued) 103 99 Additional paid-in capital 6,201,536 6,174,665 Retained deficit (2,024,874) (2,026,316) Accumulated other comprehensive loss (150,224) (198,575) Total stockholders' equity 4,026,541 3,949,873 Total Liabilities and Equity $10,083,173 $10,567,133 Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006. Reliant Energy, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2007 2006 (in thousands) Cash Flows from Operating Activities: Net loss $(24,241) $(118,943) Loss from discontinued operations 3,541 3,571 Net loss from continuing operations and cumulative effect of accounting change (20,700) (115,372) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Cumulative effect of accounting change - (968) Depreciation and amortization 202,572 171,597 Deferred income taxes (30,116) 68,644 Net changes in energy derivatives (166,400) (43,342) Amortization of deferred financing costs 45,443 7,982 Gains on sales of assets and emission allowances, net (1,727) (156,330) Debt extinguishment premium and consent fees 71,269 - Other, net 6,364 4,611 Changes in other assets and liabilities: Accounts and notes receivable, net (212,797) (135,413) Inventory (18,390) 6,269 Margin deposits, net 112,646 311,582 Net derivative assets and liabilities (27,380) (137,484) Western states and similar settlements payments (35,000) (159,319) Accounts payable 206,017 35,514 Other current assets (24,432) 8,304 Other assets (2,980) 14,663 Taxes payable/receivable (7,444) (29,884) Other current liabilities (75,353) 31,285 Other liabilities 2,493 2,845 Net cash provided by (used in) continuing operations from operating activities 24,085 (114,816) Net cash used in discontinued operations from operating activities (2,540) (36,997) Net cash provided by (used in) operating activities 21,545 (151,813) Cash Flows from Investing Activities: Capital expenditures (99,172) (41,919) Proceeds from sales of assets, net 380 1,382 Proceeds from sales of emission allowances 3,346 197,201 Purchases of emission allowances (14,127) (3,273) Restricted cash 19,646 17,033 Other, net 1,750 4,750 Net cash provided by (used in) continuing operations from investing activities (88,177) 175,174 Net cash provided by discontinued operations from investing activities - 967,568 Net cash provided by (used in) investing activities (88,177) 1,142,742 Cash Flows from Financing Activities: Payments of long-term debt (1,465,891) (326,201) Proceeds from long-term debt 1,300,000 - Increase (decrease) in short-term borrowings and revolving credit facilities, net 6,554 (55,337) Payments of financing costs (29,634) - Payments of debt extinguishment premium and consent fees (71,269) - Proceeds from issuances of stock 28,957 10,031 Net cash used in continuing operations from financing activities (231,283) (371,507) Net cash used in discontinued operations from financing activities - (638,000) Net cash used in financing activities (231,283) (1,009,507) Net Change in Cash and Cash Equivalents (297,915) (18,578) Cash and Cash Equivalents at Beginning of Period 463,909 88,397 Cash and Cash Equivalents at End of Period $165,994 $69,819 Free Cash Flow Reconciliation (Unaudited) Six Months Ended June 30, 2007 2006 (in millions) Operating cash flow from continuing operations $24 $(115) Western states and similar settlements payments 57 159 Change in margin deposits, net (113) (312) Adjusted cash flow used in continuing operations (32) (268) Capital expenditures (99) (42) Proceeds from sales of emission allowances 3 197 Purchases of emission allowances (14) (3) Free cash flow used in continuing operations $(142) $(116) Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006. Reliant Energy, Inc. and Subsidiaries Retail Energy Data (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2007 2006 Change 2007 2006 Change (in millions) (in millions) Mass gross margin $201 $272 $(71) $356 $297 $59 Commercial and industrial gross margin 52 88 (36) 68 108 (40) Market usage adjustments (16) (13) (3) (11) (1) (10) Retail gross margin (1) 237 347 (110) 413 404 9 Operation and maintenance (60) (58) (2) (121) (109) (12) Selling and marketing (30) (30) - (60) (54) (6) Bad debt expense (21) (22) 1 (38) (36) (2) Retail contribution margin 126 237 (111) 194 205 (11) Unrealized gains (losses) on energy derivatives (360) 34 (394) 256 (30) 286 Total retail energy contribution margin, including unrealized gains/losses on energy derivatives (2) $(234) $271 $(505) $450 $175 $275 Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 (gigawatt hours) (gigawatt hours) Electricity Sales to End- Use Retail Customers: Mass: Residential: Houston 3,542 4,572 6,187 7,399 Non-Houston 1,923 2,013 3,849 3,502 Small Business: Houston 756 954 1,471 1,719 Non-Houston 365 382 668 652 Total Mass 6,586 7,921 12,175 13,272 Commercial and Industrial: ERCOT (3) 9,052 8,631 17,062 16,147 Non-ERCOT 1,106 1,539 2,085 3,143 Total Commercial and Industrial 10,158 10,170 19,147 19,290 Market usage adjustments 28 (62) (73) 11 Total 16,772 18,029 31,249 32,573 Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 (in thousands, (in thousands, metered locations) metered locations) Weighted Average Retail Customer Count: Mass: Residential: Houston 1,066 1,189 1,074 1,201 Non-Houston 565 490 560 480 Small Business: Houston 117 134 119 135 Non-Houston 35 27 34 28 Total Mass 1,783 1,840 1,787 1,844 Commercial and Industrial: ERCOT (3) 87 75 85 74 Non-ERCOT 2 2 2 2 Total Commercial and Industrial 89 77 87 76 Total 1,872 1,917 1,874 1,920 June 30, December 31, 2007 2006 (in thousands, metered locations) Retail Customers: Mass: Residential: Houston 1,058 1,095 Non-Houston 567 547 Small Business: Houston 115 124 Non-Houston 36 33 Total Mass 1,776 1,799 Commercial and Industrial: ERCOT (3) 89 75 Non-ERCOT 2 1 Total Commercial and Industrial 91 76 Total 1,867 1,875 (1) Previously titled "adjusted retail gross margin" or "retail energy gross margin, excluding unrealized gains/losses on energy derivatives." (2) Segment profit or loss measure. (3) Includes customers of the Texas General Land Office for whom we provide services. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006. Reliant Energy, Inc. and Subsidiaries Wholesale Energy Data (Unaudited) Three Months Ended June 30, 2007 2006 GWh %Economic(1) GWh %Economic(1) Economic Generation Volume (2): PJM Coal 6,028.7 83% 5,847.6 81% MISO Coal 2,063.3 75% 1,748.4 63% PJM/MISO Gas 349.8 5% 248.0 4% West 899.3 13% 345.8 5% Other (3) 1,413.3 69% 1,467.3 91% Total 10,754.4 41% 9,657.1 39% Commercial Capacity Factor (4): PJM Coal 75.9% 70.6% MISO Coal 51.3% 77.1% PJM/MISO Gas 88.8% 90.7% West 95.1% 87.9% Other 91.9% 94.3% Total 75.3% 76.5% Generation Volume (5): GWh GWh PJM Coal 4,575.2 4,128.1 MISO Coal 1,058.7 1,347.6 PJM/MISO Gas 310.5 224.9 West 855.5 304.1 Other 1,298.7 1,383.4 Total 8,098.6 7,388.1 Unit Margin ($/MWh) (6): PJM Coal $32.57 $26.16 MISO Coal 30.23 19.29 PJM/MISO Gas 28.99 40.02 West - NM (7) Other 5.39 - Weighted Average Total $24.33 $18.95 Three Months Ended June 30, 2007 2006 Change Open energy gross margin (8): (in millions) PJM Coal $149 $108 $41 MISO Coal 32 26 6 PJM/MISO Gas 9 9 - West - (3) 3 Other 7 - 7 Total 197 140 57 Other margin (9): PJM Coal 15 7 8 MISO Coal 3 2 1 PJM/MISO Gas 25 8 17 West 36 46 (10) Other 17 28 (11) Total 96 91 5 Open wholesale gross margin 293 231 62 Operation and maintenance (175) (173) (2) Bad debt expense - - - Wholesale open contribution margin 118 58 60 Historical and operational wholesale hedges Power (55) (65) 10 Fuel 5 5 - Tolling/Other 20 (29) 49 Total historical and operational wholesale hedges (30) (89) 59 Unrealized gains (losses) on energy derivatives 34 18 16 Total wholesale energy contribution margin, including historical and operational wholesale hedges and unrealized gains/losses on energy derivatives (10) $122 $(13) $135 Six Months Ended June 30, 2007 2006 GWh %Economic(1) GWh %Economic(1) Economic Generation Volume (2): PJM Coal 12,127.1 84% 11,692.4 81% MISO Coal 4,244.7 78% 3,040.3 55% PJM/MISO Gas 417.1 3% 286.4 2% West 908.0 7% 1,270.8 9% Other (3) 2,750.3 67% 2,874.5 88% Total 20,447.2 39% 19,164.4 37% Commercial Capacity Factor (4): PJM Coal 77.6% 78.3% MISO Coal 56.4% 84.7% PJM/MISO Gas 83.8% 77.4% West 94.9% 96.5% Other 91.4% 88.8% Total 75.9% 82.1% Generation Volume (5): GWh GWh PJM Coal 9,407.4 9,158.4 MISO Coal 2,395.0 2,573.7 PJM/MISO Gas 349.6 221.6 West 861.4 1,226.4 Other 2,512.9 2,553.5 Total 15,526.3 15,733.6 Unit Margin ($/MWh) (6): PJM Coal $31.68 $26.97 MISO Coal 28.81 21.37 PJM/MISO Gas 28.60 40.61 West NM (7) NM (7) Other 5.57 NM (7) Weighted Average Total $24.93 $19.58 Six Months Ended June 30, 2007 2006 Change Open energy gross margin (8): (in millions) PJM Coal $298 $247 $51 MISO Coal 69 55 14 PJM/MISO Gas 10 9 1 West (4) (2) (2) Other 14 (1) 15 Total 387 308 79 Other margin (9): PJM Coal 22 16 6 MISO Coal 5 3 2 PJM/MISO Gas 36 11 25 West 59 83 (24) Other 38 52 (14) Total 160 165 (5) Open wholesale gross margin 547 473 74 Operation and maintenance (345) (307) (38) Bad debt expense 1 3 (2) Wholesale open contribution margin 203 169 34 Historical and operational wholesale hedges Power (111) (180) 69 Fuel 10 12 (2) Tolling/Other 38 (41) 79 Total historical and operational wholesale hedges (63) (209) 146 Unrealized gains (losses) on energy derivatives (60) 105 (165) Total wholesale energy contribution margin, including historical and operational wholesale hedges and unrealized gains/losses on energy derivatives (10) $80 $65 $15 (1) Represents economic generation volume (hours) divided by maximum generation hours (maximum plant capacity X 8,760 hours). (2) Estimated generation at 100% plant availability based on an hourly analysis of when it is economical to generate based on the price of power, fuel, emission allowances and variable operating costs. (3) Includes maximum generation hours from certain units in 2007 that were excluded in 2006 because a purchase power agreement was in place during that period. (4) Generation volume divided by economic generation volume. (5) Excludes generation volume related to power purchase agreements, including tolling agreements. (6) Represents open energy gross margin divided by generation volume. (7) NM is not meaningful. (8) Open energy gross margin is calculated using the power sales prices received by the plants less delivered spot fuel prices. This figure excludes the effects of other margin and our historical and operational wholesale hedges. (9) Other margin represents power purchase agreements, capacity payments, ancillary revenues and selective commercial hedge strategies. (10) Wholesale energy segment profit and loss measure. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006. Reliant Energy, Inc. and Subsidiaries PJM Coal and MISO Coal (1) (Unaudited) Summer/Winter Average Heat Q2 economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Cheswick 580 10.0 966.1 933.9 Conemaugh (2) 280 9.4 590.8 603.7 Elrama 465 11.3 764.4 708.7 Keystone (2) 282 9.5 595.7 585.8 Portland 400 9.8 676.7 611.1 Seward 521 9.6 1,052.8 1,082.4 Shawville (2) 566 10.3 1,009.6 1,008.3 Titus 246 10.8 372.6 313.7 PJM Coal Total 3,340 6,028.7 5,847.6 Q2 commercial Q2 generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Cheswick 53.0% 31.1% 512.2 290.0 Conemaugh (2) 74.7% 99.9% 441.4 603.1 Elrama 61.4% 49.4% 469.2 350.1 Keystone (2) 95.1% 83.8% 566.5 490.7 Portland 66.2% 86.8% 447.7 530.2 Seward 82.6% 59.5% 870.1 643.5 Shawville (2) 91.3% 90.7% 921.5 914.6 Titus 93.0% 97.5% 346.6 305.9 PJM Coal Total 75.9% 70.6% 4,575.2 4,128.1 Summer/Winter Average Heat Q2 economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Avon Lake 721 9.3 1,197.7 1,064.2 New Castle 328 10.6 491.5 414.9 Niles 216 10.5 374.1 269.3 MISO Coal Total 1,265 2,063.3 1,748.4 Q2 commercial Q2 generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Avon Lake 38.1% 82.9% 456.2 882.5 New Castle 53.9% 67.2% 264.7 278.8 Niles 90.3% 69.2% 337.8 186.3 MISO Coal Total 51.3% 77.1% 1,058.7 1,347.6 Summer/Winter Average Heat Q2 YTD economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Cheswick 580 10.0 1,884.1 1,765.0 Conemaugh (2) 280 9.4 1,186.5 1,206.5 Elrama 465 11.3 1,611.9 1,549.2 Keystone (2) 282 9.5 1,182.5 1,153.4 Portland 400 9.8 1,356.5 1,227.5 Seward 521 9.6 2,118.9 2,191.6 Shawville (2) 566 10.3 2,054.5 1,973.4 Titus 246 10.8 732.2 625.8 PJM Coal Total 3,340 12,127.1 11,692.4 Q2 YTD commercial Q2 YTD generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Cheswick 72.1% 63.3% 1,358.5 1,116.5 Conemaugh (2) 83.6% 97.7% 992.3 1,179.2 Elrama 66.9% 65.5% 1,079.0 1,014.1 Keystone (2) 81.4% 81.5% 962.3 940.2 Portland 72.8% 90.5% 987.5 1,110.9 Seward 68.0% 65.4% 1,440.9 1,434.2 Shawville (2) 92.9% 89.7% 1,909.2 1,770.8 Titus 92.6% 94.7% 677.7 592.5 PJM Coal Total 77.6% 78.3% 9,407.4 9,158.4 Summer/Winter Average Heat Q2 YTD economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Avon Lake 721 9.3 2,502.2 1,867.2 New Castle 328 10.6 999.2 651.9 Niles 216 10.5 743.3 521.2 MISO Coal Total 1,265 4,244.7 3,040.3 Q2 YTD commercial Q2 YTD generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Avon Lake 43.0% 88.2% 1,075.9 1,646.6 New Castle 66.0% 76.7% 659.6 500.2 Niles 88.7% 81.9% 659.5 426.9 MISO Coal Total 56.4% 84.7% 2,395.0 2,573.7 (1) Unless otherwise indicated, the Company owns a 100% interest in each facility listed. (2) The Company leases a 100% interest in the Shawville facility, a 16.67% interest in the Keystone facility and a 16.45% interest in the Conemaugh facility under facility interest lease agreements, which expire in 2026, 2034 and 2034, respectively. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006. Reliant Energy, Inc. and Subsidiaries PJM/MISO Gas (1) (Unaudited) Summer/Winter Average Heat Q2 economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Aurora (2) 942 10.5 11.9 3.8 Blossburg 23 14.6 0.8 0.3 Brunot Island 315 10.4 2.9 - Gilbert 614 11.0 16.9 14.7 Glen Gardner 184 14.6 2.0 1.8 Hamilton 23 14.8 1.7 0.1 Hunterstown 70 14.8 5.2 0.5 Hunterstown CCGT 833 7.0 258.6 214.3 Mountain 47 14.3 4.3 0.8 Orrtanna 23 14.4 2.5 0.3 Portland 185 11.2 3.6 1.6 Sayreville 264 13.8 9.0 4.4 Shawnee 23 14.0 - - Shawville 5-7 (3) 6 10.2 - - Titus 35 17.4 - - Tolna 47 14.2 3.2 0.7 Werner 252 13.8 8.9 0.1 Shelby 356 9.8 18.3 4.6 PJM/MISO Gas Total 4,242 349.8 248.0 Q2 commercial Q2 generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Aurora (2) 69.7% 28.9% 8.3 1.1 Blossburg 100.0% 100.0% 0.8 0.3 Brunot Island 100.0% 0.0% 2.9 (1.1) Gilbert 38.5% 30.6% 6.5 4.5 Glen Gardner 100.0% 88.9% 2.0 1.6 Hamilton 100.0% 100.0% 1.7 0.1 Hunterstown 98.1% 100.0% 5.1 0.5 Hunterstown CCGT 94.0% 97.0% 243.0 207.9 Mountain 100.0% 100.0% 4.3 0.8 Orrtanna 100.0% 100.0% 2.5 0.3 Portland 100.0% 87.5% 3.6 1.4 Sayreville 23.3% 75.0% 2.1 3.3 Shawnee 0.0% 0.0% (0.1) - Shawville 5-7 (3) 0.0% 0.0% - - Titus 0.0% 0.0% (0.6) (1.2) Tolna 100.0% 100.0% 3.2 0.7 Werner 87.6% 100.0% 7.8 0.1 Shelby 95.1% 100.0% 17.4 4.6 PJM/MISO Gas Total 88.8% 90.7% 310.5 224.9 Summer/Winter Average Heat Q2 YTD economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Aurora (2) 942 10.5 15.6 7.0 Blossburg 23 14.6 4.0 1.2 Brunot Island 315 10.4 3.7 - Gilbert 614 11.0 25.1 43.6 Glen Gardner 184 14.6 2.2 2.0 Hamilton 23 14.8 1.7 0.2 Hunterstown 70 14.8 5.2 0.6 Hunterstown CCGT 833 7.0 302.8 214.3 Mountain 47 14.3 5.5 1.4 Orrtanna 23 14.4 3.0 0.3 Portland 185 11.2 6.8 1.8 Sayreville 264 13.8 9.7 4.8 Shawnee 23 14.0 0.1 - Shawville 5-7 (3) 6 10.2 - - Titus 35 17.4 - - Tolna 47 14.2 4.0 0.9 Werner 252 13.8 9.4 0.1 Shelby 356 9.8 18.3 8.2 PJM/MISO Gas Total 4,242 417.1 286.4 Q2 YTD commercial Q2 YTD generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Aurora (2) 53.2% 15.7% 8.3 1.1 Blossburg 100.0% 100.0% 4.0 1.2 Brunot Island 100.0% 0.0% 3.7 (3.0) Gilbert 47.0% 19.7% 11.8 8.6 Glen Gardner 100.0% 90.0% 2.2 1.8 Hamilton 100.0% 100.0% 1.7 0.2 Hunterstown 96.2% 100.0% 5.0 0.6 Hunterstown CCGT 88.4% 94.4% 267.7 202.4 Mountain 100.0% 100.0% 5.5 1.4 Orrtanna 100.0% 100.0% 3.0 0.3 Portland 100.0% 77.8% 6.8 1.4 Sayreville 18.6% 58.3% 1.8 2.8 Shawnee 0.0% 0.0% - (0.1) Shawville 5-7 (3) 0.0% 0.0% (0.1) - Titus 0.0% 0.0% (1.5) (1.7) Tolna 100.0% 100.0% 4.0 0.9 Werner 88.3% 0.0% 8.3 (0.4) Shelby 95.1% 50.0% 17.4 4.1 PJM/MISO Gas Total 83.8% 77.4% 349.6 221.6 (1) Unless otherwise indicated, the Company owns a 100% interest in each facility listed. (2) Excludes generation volume during periods the unit operated under power purchase agreements. (3) The Company leases a 100% interest in the Shawville facility under a facility interest lease agreement, which expires in 2026. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006. Reliant Energy, Inc. and Subsidiaries West and Other (1) (Unaudited) Summer/Winter Average Heat Q2 economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Bighorn (2) 598 7.2 517.0 16.7 Coolwater 622 10.1 136.6 110.8 Ellwood (2) 54 13.3 - - Etiwanda (2) 640 10.0 0.4 - Mandalay (2) 560 10.9 111.7 79.8 Ormond Beach 1,516 9.6 133.6 138.5 West Total 3,990 899.3 345.8 Q2 commercial Q2 generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Bighorn (2) 100.0% 79.6% 517.0 13.3 Coolwater 96.3% 99.3% 131.6 110.0 Ellwood (2) 0.0% 0.0% (0.1) - Etiwanda (2) 100.0% 0.0% 0.4 - Mandalay (2) 99.4% 96.1% 111.0 76.7 Ormond Beach 71.6% 75.2% 95.6 104.1 West Total 95.1% 87.9% 855.5 304.1 Summer/Winter Average Heat Q2 economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Channelview (2) 830 6.1 1,398.4 1,461.3 Choctaw 800 7.0 13.9 - Indian River (2) 587 10.5 - - Osceola (2) 470 11.0 1.0 6.0 Other Total 2,687 1,413.3 1,467.3 Q2 commercial Q2 generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Channelview (2) 91.8% 94.3% 1,283.8 1,377.4 Choctaw 100.0% 0.0% 13.9 - Indian River (2) 0.0% 0.0% - - Osceola (2) 100.0% 100.0% 1.0 6.0 Other Total 91.9% 94.3% 1,298.7 1,383.4 Summer/Winter Average Heat Q2 YTD economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Bighorn (2) 598 7.2 517.0 935.5 Coolwater 622 10.1 136.6 110.8 Ellwood (2) 54 13.3 0.3 0.1 Etiwanda (2) 640 10.0 0.4 - Mandalay (2) 560 10.9 120.1 85.9 Ormond Beach 1,516 9.6 133.6 138.5 West Total 3,990 908.0 1,270.8 Q2 YTD commercial Q2 YTD generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Bighorn (2) 99.8% 99.5% 515.8 931.0 Coolwater 95.2% 97.8% 130.0 108.4 Ellwood (2) 33.3% 100.0% 0.1 0.1 Etiwanda (2) 100.0% 0.0% 0.4 - Mandalay (2) 99.5% 96.4% 119.5 82.8 Ormond Beach 71.6% 75.2% 95.6 104.1 West Total 94.9% 96.5% 861.4 1,226.4 Summer/Winter Average Heat Q2 YTD economic generation Capacity Rate volume (GWh) Unit Name (MW) (MMBtu/MWh) 2007 2006 Channelview (2) 830 6.1 2,735.3 2,864.7 Choctaw 800 7.0 13.9 - Indian River (2) 587 10.5 0.1 - Osceola (2) 470 11.0 1.0 9.8 Other Total 2,687 2,750.3 2,874.5 Q2 YTD commercial Q2 YTD generation capacity factor volume (GWh) Unit Name 2007 2006 2007 2006 Channelview (2) 91.3% 88.8% 2,497.9 2,543.7 Choctaw 100.0% 0.0% 13.9 - Indian River (2) 100.0% 0.0% 0.1 - Osceola (2) 100.0% 100.0% 1.0 9.8 Other Total 91.4% 88.8% 2,512.9 2,553.5 (1) Unless otherwise indicated, the Company owns a 100% interest in each facility listed. (2) Excludes generation volume during periods the unit operated under power purchase agreements. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006. Reliant Energy, Inc. and Subsidiaries Net Debt (Unaudited) (in millions) June 30, 2007 Debt: Senior secured revolver $- Senior secured notes 750 Senior unsecured notes 1,342 Convertible senior subordinated notes 2 Orion Power 12% notes (1) 432 PEDFA fixed-rate bonds for Seward plant due 2036 500 Channelview 342 Retail working capital facility - Warrants (1) Other (2) 1 Total GAAP debt 3,368 REMA operating leases (off-balance sheet) 480 Total debt and debt equivalents (3) 3,848 Less: Cash and cash equivalents (166) Restricted cash (5) Net margin deposits (323) Net Debt $3,354 (1) Orion 12% notes include purchase accounting adjustments of $32 million. (2) Other subsidiary debt. (3) Debt equivalents include off-balance sheet REMA leases of $480 million. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2006.