Thank you, Sam. Good morning and welcome to our second-quarter 2007 earnings call. This call is being broadcast live over the phone and from our website at www.NRGenergy.com. You can access the call presentation and press release furnished with the SEC through a link on the Investor Relations page of our website. A replay and podcast of the call will be posted on our Web site. This call, including the formal presentation and the question-and-answer session, will be limited to one hour. In the interest of time, we do ask what you please limit yourselves 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 August 2, 2007 and any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events. During this morning's call, we will refer to both GAAP and non-GAAP financial measures of the Company's operating and financial results. For complete information regarding our non-GAAP financial information, the most directly comparable GAAP measures and quantitative reconciliation of those figures, please refer to today's press release and this presentation. Now, with that, I would like to turn the call over to David Crane, NRG's President and Chief Executive Officer.

Thank you, Nahla, and good morning, everyone. I'm joined here today by Bob Flexon, our CFO, as usual who will be doing part of the presentation. But also, as we are originating this call from the West Coast, I'm also joined by our regional President for NRG West, Steve Hoffman. Jan Paulin, who runs Padoma Wind, our wholly-owned winded subsidiary, and Drew Murphy, our General Counsel, and they will be available to answer any questions that you have about their areas of expertise. I thought that, in a little bit of a departure from our normal way, looking at slide 3 in terms of our presentation, rather than boring you with the same agenda we always show, that I would start by focusing on the current themes. As usual, there's a lot going on at NRG but I think a little bit different maybe some other… there's obviously been some noise swirling around the Company and the Company's capital structure in terms of the unrest in the market. So, I really wanted to focus on these themes. First and foremost, the reason that we are here in California is actually for the ribbon-cutting of the Long Beach Emergency Repowering project, which is the first started and the first completed of our 10,000 megawatt $16 billion repowering program. I think it's a great project and a very significant project, and I'm going to talk more about that later. Second, I want to just point all of your attention to the strength of our baseload hedging strategy. Keep in mind that we have a quarter where there's been a significant decline in gas prices on the front end of the curve, and there's been absolutely no sustained period of hot weather in any of our core markets so far this summer. Yet,…

Thank you, David, and good morning. Today, I will provide our customary review of our second-quarter financial performance, along with an updated 2007 outlook. In connection with our Repowering advancements announced today, I will provide additional information on the timing of capital expenditures and preliminary financing plans. My final topic will address capital allocation, the planned formation of the Holdco structure, and how the current credit market volatility may impact its implementation. While we continue to review our alternatives, I will highlight right now that we will not put the Company at risk by entering an unstable credit market. We stand by our commitment of returning capital to shareholders. Should we elect to delay initiation of the common stock dividend, we will increase our common share repurchases in 2008. Let's begin with a review of the second-quarter results. The second-quarter 2007 EBITDA was $577 million versus $393 million for the same period last year, as shown on slide 24. After removing the forward mark-to-market impact from EBITDA, quarterly adjusted EBITDA increased about $205 million to $533 million, a stronger quarter than what we had forecasted. Second-quarter gross margins benefited from the $156 million revenue increase in the Texas region from the November 2006 contract hedge reset. Lower Texas gas generation versus the prior year, due to cooler weather and lower capacity revenues, are more than offset by a 5% increase in baseload generation and merchant revenues. The Northeast had a strong second-quarter performance as gross margins increased by $48 million, mainly from a 9% increase from generation and higher pricing. Gas generation at our Arthur Kill plant increased 108% during the quarter, versus the same period last year, as it was called upon frequently to reduce transmission constraints around New York City. The 15% increase in natural gas prices during…

Well, thanks, Bob. Since we've taken up a lot people's time and I think some people have another commitment attend, Sam, I think we will open the lines directly for a Q&A.

[Operator Instructions] And our first question comes from John Kiani from Deutsche Bank. Please go ahead.

Good morning, David, Bob.

Good morning, John.

Looking at the Cedar Bayou project and some of the information on the slides and some of the heat-rate forwards that you provided, can we infer at least the midteens or something like a midteens after-tax return on capital, sort of a base case? And then with upside from there, if market heat rates rise in ERCOT with the declining reserve margin forecast? Is that the right way to think about it?

Well, it depends how you look at it, John. We look at it for the actual cash investment that we have to put in there. It is a strong project with strong returns. If we go to the point where we actually want to lever it and look at it on a levered basis, it's just an absolute winners since we could actually fund our entire cash contribution. The strength of that project comes with, as David mentioned, leveraging the infrastructure of the plant. Plus, we had equipment that we were just carrying on balance sheet ad idle, so we're putting that to work. So when you look on the cash investment, it is a very strong return profile project.

All right. Thank you. Then do you have any recent thoughts or updates on MIBRAG and any additional thoughts on your interest in monetizing that asset in Germany?

John, the MIBRAG asset, what we're really waiting for now is… we've always said that, with MIBRAG like with Gladstone, one of the issues was that it is a highly structured project with all sorts of other parties that have rights. The big thing, as you know, that has changed is that the ownership of our 50% partner in that project is in the process of changing. While they are in that process, there is really very little discussion that can be had with either the existing management or the prospective new owner. We expect that their transaction… we're told their transaction will get all of the necessary approvals and likely close in September. And then we expect to have a full discussion with the new owners. You know, we have certain rights that are triggered by a change in control and we're well where of what those rights are.

Thank you very much.

Thank you. And our next question comes from Elizabeth Parrella with Merrill Lynch. Please go ahead.

Thank you. First, if I could ask, on the development projects, David, you mentioned kind of stay tuned on STP into the weeks ahead. Would that maybe suggest that you could be coming back to us with some news on that prior to the third-quarter call? Then, just on the other development projects, can you talk a little bit about whether you've got more traditional TPAs on the wind projects, or if you are pursuing financial-type hedges on those as well as on Cedar Bayou?

Well, I will hand the question about the type of offtake arrangements on the wind to Jan. On the nuclear project, the short answer, Elizabeth, is yes. We would expect to be getting back to you with details prior... I mean, assuming that the next quarter call is at its usual time at the beginning of November, we would be expecting to get back to you before that with significantly more detail about the nuclear project. On the question of when, Jan, do you want to…?

Certainly. On the question of when on the issue of offtake on wind projects, it's really… the strategy depends on the location of the projects. The project in California, which we anticipate to build out in 2009, will be at that point in time, the offtake will be covered by a 25-year PPA with a fixed power price for the entire period. In terms of the Texas projects, those will be selling power into the merchant market on the basis of achieving a probably five to seven-year hedge, power rate hedge, which is what we're currently in the process of negotiating with a short list of a number of banks.

Okay. If I could follow-up with Bob just quickly on the capital allocation discussion? Just to clarify, could you remind us what the regulatory approvals on Holdco are, where you are on that? The changes to the senior credit facility, are any of those changes contingent on going ahead with Holdco, or is that deal completely done? Lastly, if you could update us on just where the RP baskets are at the end of the quarter?

Okay. On the regulatory, Elizabeth, there's three regulatory bodies that require approval. We've received two of the three. The third one that we're waiting for is the NRC. We expect to have that, I would say, somewhere around early fourth quarter. So they are all proceeding as we had planned. As far as all of the refinancing that we did back on May 2, everything that we put in place around eliminating cross-defaults from project debt to the first lien or being able to provide liens… or I'm sorry, collateral on a first lien basis, not a second-lien basis, or reduction of the pricing grid that mentioned a moment ago… all of those stay. The only thing that can go away is, at the end of December, the right for us to call $1 billion to fund the Holdco expires at the end of December, so that's the only thing that goes away. The regulatory approvals stay, and they stay in place for quite a while. So if the credit markets settle down and things get much better, whether it's the first quarter of next year or the second quarter, we can fund Holdco; we are set to go. if I look back in time and said would I have done something differently, I probably would have initiated the Holdco approval process earlier than what we did. We went the course of finance first and get the regulatory approval second. Certainly, with hindsight, we probably should have gone for the approval earlier, but it doesn't expire, so we retain the option to do that. Finally, on the RP baskets on the first lien, the bank baskets, at the end of June, we are, in round numbers, about $750 million on the bank side. On the pond side at the end of June, we are around at $110 million or so. Again, both of those baskets grow quarterly at this point in time.

Thank you.

Thank you. And our next question comes from Dan Eggers from Credit Suisse.

Good morning. On the Repowering program, obviously there's a lot of benefit at Cedar Bayou for the site value and performing in a partner. As we look at some of the other big projects you guys have identified, do you see similar opportunities where you can get a pretty big capital advantage by letting somebody come in and effectively farm into your economic interest? You know, what kind of return advantage do you see versus a straight greenfield project?

Well, the short answer to the front part of your question is yes. I mean, given that I think the paradigm of Cedar Bayou is one that we will be trying to use elsewhere, and the nature of virtually all of the projects in our Repowerings program, other than the wind projects, is that they are all at existing sides. We certainly think that, when you get together with like-minded partners, who I think in the case of the Cedar Bayou project we are extraordinarily pleased to be partnered with Public Service of New Mexico and with their partner, Cascade. But you know, not only do the partners bring more to the party but clearly there's the win-win possibility where you can pass some of the benefit of working off an existing site to them and then also monetize some for us by the fact that people reasonably expect they shouldn't get access to the site for free. So I think we can see this, and we will be using that paradigm in bringing partners into a lot of our repowering projects over time. In terms of the last part of your question, Dan, which I think was specifically what type of return advantage does it give us over a true greenfield, Bob, I've ever done that. I mean I don't have a 200 basis point answer or anything to that. Do you?

The rule of thumb that we've used on this when we looked across our projects… and again, as David said, this is the strength of our Repowering program is what did in Long Beach or in Texas. We've got some great opportunities in South Central and the Northeast. But the general rule of thumb when we've looked at this, Dan, it's been about 10% to 15% cost advantage on the infrastructure.

Okay. Then just one other question on the capturing heat rate expansion in Texas, with heat rates in '09 and '10 moving up you said even locking some in. Is that a statement that you guys view the '09-'10 forwards as being a fair price or is there still room, in your view, for that to trend even higher from where we are today?

Well, I think, if Kevin Howell were here, he would completely obscure the answer to that question, so I think, in memory of his… he is back in Princeton holding down the fort. I would say that it's closer to fair value but I don't want to signal anything about our trading position vis-à-vis 2009-2010.

Fair enough. Thank you.

Thank you and our next question comes from Gregg Orrill from Lehman Brothers. Please go ahead.

Thanks very much. I wanted to return to slide 12 on the hedge profile and heat rate sensitivities. On the heat rate sensitivity of about 1 mmBtu change per megawatt hour, it about equates to about $400 million of EBITDA on knitting out your… netting out your hedge position. On a fully unhedged basis, what would the upside be there?

Yes, that's close to the fully unhedged…

Yeah, close to some have to say, Gregg, I don't have the number off the top of my head but it looks a lot like the 2012 range. You have to back out some of the hedges that we have. But we are 23% hedged in 2012, so that probably represents a 75% long position there.

But the 23%, that's largely Big Cajun as well, right, so it's actually even closer to it?

The 2012 in terms of the gas exposure is almost completely open.

You are probably in the $400 million to $450 million range, I would say, Gregg.

Okay. Then, what can you tell us about estimate of overall construction cost on Cedar Bayou?

Could you be a little bit more specific on it?

You disclosed the equity contribution but sort of cost per kilowatt of construction so we can just kind of get a feel for what CCGTUs cost at this point?

Go ahead.

The total project cost, when we looked at the total project cost including the contributed assets, if you will, Gregg, and some of infrastructure, it is about a $300 million project.

Okay.

That's for the total construction and contribution of equipment and the like.

Great. Then maybe the last question would be around what you're seeing in the… as you implement your hedging program and are the commodities markets on kind of a daily basis, what sort of impact in terms of collateral or in doing business, what sort impacts you've seen there from the recent blowout in credit spreads?

In the collateral?

Yes.

We haven't seen any. I don't know if it's the fact that the second lien structure, combined with LCs, insulates us from that. I mean we will check but I mean, we've been through our risk review meetings and we've really… we've seen nothing unsettling and no spillover from sort of the debt market into the trading down credit.

First of all, from a leverage standpoint, we are about 95% fixed, so we're getting limited impact from the credit markets in general. As far as the collateral markets, we are a net poster of collateral, and the amount of cash that folks owe us is small, so it's not a meaningful number.

Great. Thanks a lot.

Thank you and our next question comes from Michael Lapides from Goldman Sachs Please go ahead.

Easy quick one here… can you talk a little bit about the potential addition or new unit at Big Cajun, where you are in discussions with that, and whether you have any additional thoughts regarding your gas assets in the state as well?

Gas assets in the state?

Meaning in Louisiana, Sterlington?

Well, the second part of your question, Michael, is that, in terms of gas assets in the state, the nature of our portfolio down there, where we are long high-peaking capacity and actually short-based immediate load, you know we've long aspired to be able to buy a 7 or 8 heat rate combined-cycle plants in that region. I've never been able to because we could never get to the price level other people could get too, even though we thought that we had better uses for one servicing our co-op load. So that situation hasn't fundamentally changed. You know, we would like to but we're not going to throw silly money at it. In terms of where we are at Big Cajun is that… and I think that this is, you know, we said from the beginning that, with the original 18 projects in the Repowerings program, there was no way that we were going to go 18 for 18, and that we were going to be financially disciplined. You know, we haven't killed Big Cajun II-IV but we were unable… I think we got commitments to I think something like 450 megawatt of the 700 megawatt and that just wasn't enough in that market. You know, had that plant been located in a true, traded market, an ISO market, maybe that would've been enough, but down there, in a bilateral market, that could not get over the hurdle. We sort of stalled at that number. So where we are now is that we've been pushing forward with a smaller coal or petco-fired project next door, two miles down the road at Big Cajun I. We expect to get the permit for a CFB there and arranging the offtake and the partners for a 200 megawatt project when you already had 450 signed up for a bigger project is quite an easier task. It probably shifts the dynamic in terms of being a seller's market or a buyer's market. So I think the answer to your question is that we're going to be pushing forward with Big Cajun I and then we will be optimistic with respect to Big Cajun II-IV.

A quick follow-up… we've seen a couple of assets, combined-cycle type assets in that region trade hands, or announcements of transactions in the $320 to $350 per kilowatt range. Do you view that as kind of being a rich price for those type of assets?

It's interesting. Michael, I can't really answer that question right now. I think there is a spirited internal debate over whether that's a good price level or a bad price level. Because you know, in that market, there's just not a lot of visibility beyond four or five years out, so you know, I think it's a close call at that level.

Okay. Thank you.

One thing that I just want to correct myself… I had a chance just to look up on the Cedar Bayou IV, I think the total all-in costs are closer to $400 million, so the total cost on the kilowatt is over $700. I was speaking from memory; I looked it up while you were going through…

That's the actual Cedar Bayou costs. I think people have to keep in mind that not only did we have the existing infrastructure, but a lot of the equipment we either had, as you said, in the warehouse, or we actually acquired some of the key equipment for that plant from other people who had stored equipment.

So that gives a market view of the true cost per kilowatt.

Operator, I think we only have time for one more question.

Sure. And our last question comes from Brian Russo from Landenburg Thalmann.

Good morning. David, earlier you mentioned that the Commercial Ops group had anticipated softening in the summer market and sold the peaking capacity forward. I'm just wondering. Was that strictly related to your take on gas prices or was there something other, something else fundamentally in the market that went into that decision?

I think it was principally a view on gas prices. I would like to say that they anticipated the summer weather being soft but I don't actually think that we had any greater insights into the lack of summer than anybody else. So I think it was, you know, it was very much a view on the very near-term view of gas prices. I mean, we remain extremely bullish on where gas prices are going in the long-term, but in the traded market over, you know, in the prime market and all, I think they thought it was a little high going into the summer.

Okay. Then just quickly, that 239 million of shares outstanding used throughout the presentation, is that the fully diluted shares outstanding we should be using?

No, that's the primary. Fully diluted I think is more like in the 270 range, 270, 280 range.

Right. Okay. Thank you.

Thanks Brian.

Thank you, Brian. Operator, thank you. Thanks everyone for participating on the call. We are sorry we held you over. Thank you.

Thank you. Ladies and gentlemen, this does conclude your conference call. Thank you for attending and you may now disconnect your lines.