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News May 5, 2009  RSS feed

NRG Energy Completes Acquisition of Reliant Energy's Retail Business

HOUSTON, TX; May 1, 2009— NRG Energy, Inc. (NYSE: NRG) has completed its $287.5 million acquisition of Reliant Energy's retail business which provides electricity service to more than 1.7 million customers in Texas. The sale, announced on March 2 and closed effective today, creates a stronger and more reliable competitive business that benefits Texas consumers. While NRG intends to provide executive management, financial, commercial operations and risk functional support, the retail business will continue to function as a self-contained business unit doing business as Reliant Energy and headquartered in Houston.

"The success of Reliant's retail electricity business is based on two things: great customer service and competitive pricing and we believe our customers will benefit from the combination of NRG and Reliant in a variety of ways," said David Crane, NRG's President and Chief Executive Officer. "Indeed, we expect price reductions to take place almost immediately and that is good news for Texas consumers just in time for summer."

In addition to offering a variety of plans from fixed energy prices and flexible monthly options to meet the needs of individual customers, Reliant will be expanding the renewable portion of its supply portfolio and strengthening its service commitment to residential customers who are moving residences.

Reliant now will operate as part of NRG Texas, which is run by Kevin Howell, Executive Vice President of NRG and President of NRG Texas. Jason Few, previously Reliant's Senior Vice President, Mass Markets & Operations, has been named President, Reliant Energy and Senior Vice President, Retail for NRG, reporting to Howell.

"All of the services that you've come to know and respect about Reliant Energy will remain the same. We'll have the same reliable team of people that you've come to count on to provide the 24/7 customer care that has earned such high satisfaction ratings from customers," said Howell. "We are committed to Texas and that includes maintaining our joint commitment to our communities, the environment, and the ERCOT market."

Excluding transaction and other one-time costs, NRG expects the transaction to be immediately accretive to EBITDA and free cash flow, and fully accretive in 2010. NRG will pay $287.5 million in cash and will remit net working capital to Reliant's parent company, RRI Energy, over the next six months. Given NRG's diverse asset base, this transaction provides for an efficient credit structure as it allows for significant reduction in actual and contingent collateral. By backing Reliant's load-serving requirements with NRG's generation, the need to sell and buy power from other financial institutions and intermediaries that trade in the ERCOT market will be reduced significantly, resulting in reduced transaction costs and credit exposures.

"We have believed for some time now that increasing sustainability and fighting climate change must be a top priority for the electricity sector and that NRG should play an important role in that effort. Until now, we limited our efforts to the wholesale generation business through our RepoweringNRG initiative to revitalize our power plant asset base with more efficient and lower carbon generating technologies," said Crane. "With Reliant's base of retail customers, we now have a platform to build on the entire class of distributed generation and retail alternative energy technologies— including smart meters and solar powered rooftop installations and ultimately, electric vehicles, among other distributed technologies—that directly benefit consumers and the environment."

NRG Energy, Inc., a Fortune 500 company, owns and operates one of the country's largest and most diverse power generation portfolios. Headquartered in Princeton, NJ, the Company's power plants provide more than 24,000 megawatts of generation capacity—enough to supply more than 20 million homes. NRG's retail subsidiary, Reliant Energy, serves more than 1.7 million residential, business, commercial and industrial customers in Texas. A past recipient of the energy industry's highest honors— Platts Industry Leadership and Energy Company of the Year awards, NRG is a member of the U.S. Climate Action Partnership (USCAP), a group of business and environmental organizations calling for mandatory legislation to reduce greenhouse gas emissions. More information is available at www.nrgenergy. com.


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