Good day, ladies and gentlemen. Welcome to the NRG Energy Second Quarter 2008 Earnings Results Conference Call. I would now turn the meeting over to Ms. Nahla Azmy, Vice President, Investor Relations. Please go ahead.

Thank you, Jennifer. Good morning and welcome to our second quarter 2008 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 the website. A replay of the call will be posted 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 the press release and this conference call. In addition, please note that the date of this conference call is July 29, 2008 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 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 good morning everyone and thank you for joining us for this second quarter 2008 earnings call, which is the 18th earnings call in the history of the new NRG. I am joined here this morning by Bob Flexon, our Chief Operating Officer; and Clint Freeland, our Chief Financial Officer, both of whom will be giving part of presentation. And also by Mauricio Gutierrez, who runs our Commercial Operations Group and who will be available for answer questions to the extend appropriate. So let me start, and I'll be referring to slides, which appear on our website. Let me start with slide four. Before I hand it to Bob, I'd like to give you my take on the highlights of our performance year-to-date. So first, plant operating performance is the best. It has been since I've been here at NRG both in terms of safety and reliability and that performance I'm pleased to report has been achieved across all regions and all types of plants. Second, our commercial operations team has done a stunningly good job both in capturing the value of our unhedged assets in real time, but also in adding another layer of baseload hedges during the period of high gas price volatility, which ended just recently. And third, our financial team has feared a cautious course during the quarter in which the Wall Street contingent dictated caution. And as a result, we easily weathered from a liquidity perspective, the mid quarter spike in natural gas prices, which forced others in the industry to arrange emergency crisis relief. And during the second quarter, we substantially increased our net liquidity. I think this just acquires our never-ending commitment to prudent balance sheet management. And I am very pleased at the work that Clint and his team has done in this regard. What all this means is that we achieved the first half result that has enabled us to increase our full year guidance by a substantial amount. While as I mentioned before at the same time building up our future profitability with hedges struck at price level higher than we have generally realized in the past. In short, apart from the recent performance of our share price, there is precious little for me to complaint about either in terms of our current operating performance or our future prospects. With that, I'd like to hand it over to Bob Flexon.

Thank you David. Like our first quarter results earlier this year, the company's operating performance during the quarter was outstanding. Slide 6 summarizes our year-to-date safety performance, the coal inventory position at June 30th in the quarterly and year-to-date generation. Starting with safety, our recordable incident rate through June 30th was 0.92 versus 1.69 through June 2007, nearly a 46% improvement in top quartile performance as compared to industry average. Reportable incidents also declined over 40%, dropping from 27 through June of last year to 15 as of June 2008. Over the remainder of the year, priorities for our safety program are the further development news of leading safety indicators preparing for and filing the applications for OSHA's highly regarded voluntary protection program for five of our sites later this year and early 2009, and continuing improvement through our preventive safety and reporting program. Coal inventories dropped during the second quarter to an average of 41 days on hand at June 30th versus 45 days at the end of the first quarter. The decline is primarily related to lower inventory level of Big Cajun II and WA Parish facilities resulting from rail and barge disruptions during the second quarter in connection with the Midwest floods and high water levels on the Mississippi. Our shipping routes and modes have returned to normal operation and inventory levels are building at these locations. In addition to the transport issues, the baseload plants have improved their operating performance resulting in higher function of coal. Generation for the quarter and year-to-date increase over the same period last year across all regions. The higher generation was attributable to higher demand for the intermediate and peaking generation and higher baseload generation due impart to improve reliability, which I will cover next. Slide 7 provides quarterly and year-to-date…

Thank you Bob. Starting on slide 14, NRG built upon a solid first quarter with an exceptional second quarter, generating $683 million in adjusted EBITDA, 30% improvement over the second quarter of 2007. As David and Bob has indicated, these results are primarily due to outstanding plant operating performance throughout the fleet in a flexible commercial operation strategy, which enabled the company to benefit from recent market volatility. Cash flow from operations totaled $376 million, a 7% improvement over the $353 million, posted in the second quarter of last year. The cash flow story for the quarter however was somewhat masked by movements in cash collateral postings, related to NRG short-term hedge positions. Excluding these collateral postings, cash flow from operation grew 65% to $554 million for the second quarter of 2008 versus $336 million, last year. Coupled with a stronger than expected performance in the first quarter, particularly by the company's South Central and Western regions, year-to-date adjusted EBITDA is well ahead of last year totaling $1.21 billion for the first six months, an 18% increase compared to $1 billion in 2007. Cash flow from operations for the first half of 2008 was $436 million, down slightly from last year's $459 million. However, excluding the effect of cash collateral postings on both year's results, cash flow from operations increased 36% from $562 million, during the first half of 2007 to $764 million in 2008. During periods of high commodity price volatility, liquidity becomes increasingly important, particularly when managing a significant hedging program. Notwithstanding the posting of an additional $178 million in net cash collateral during the second quarter and internally funding $245 million in capital expenditures, NRG's total liquidity rose by $276 million as a $420 million increase in cash balances more than offset a $144 million reduction in…

Thank you Clint. This is the part of presentation, I usually, talk a little bit about the company strategy going forward. And I think I may depart from tradition to some extent, because I think most people on the call have a pretty good idea of what company strategy is going forward and it hasn't really changed over the last three months. What I'd like to do is look a little more at the situation as it exists today. And as I look at the situation, as I look it this company over the... and think about the past 12 months, I see a situation, in which the 12 months forward gas curve has gone up by 18%. We have during that 12 months period increased our EBITDA guidance now three times, twice in 2007 and now once in 2008. We filed the first application for a nuclear plant in United States in 29 years and we have still 12% of our nuclear development company for $300 million. We have successfully completed two repairing projects Cos Cob and Long Beach, and we have three construction projects Sherbino, Elbow Creek, and Cedar Bayou 4, which are proceeding on time and on budget. And we have been awarded power purchase agreement long term PPAs for also doing a repowering project in the state of California, and our GenConn project in City of Connecticut. During that 12 months period, our stock is down more than 10%. That's somewhere it was 12 months ago. Since, I am sure that this question is as much on your mind as it is our minds, and we are all shareholders here, I thought I would do what I can to try and identify the issues, which could be overhanging our stocks and analyze whether those issues are…

Thank you. [Operator Instructions]. The first question comes from John Kiani from Deutsche Bank. Please go ahead.

Good morning.

Good morning, John.

In late May at our conference, you stated that the Calpine deal would either happen or not happen by the end of the second quarter. And I guess, we're one month beyond that timeframe now; and on slide 22, the company highlighted potential overhangs on the stock. I actually think that this is a meaningful overhang on NRG stock that wasn't discussed. Can you please tell me where you stand on that transaction?

Well, I mean John, as you know, we don't comment on any discussions with anyone that's in progress or otherwise. Since I went to your conference at [indiscernible] personal expense or corporate expense and outlined our rationale for the Calpine proposal we made at the time. I think it's people on the phone were paying attention to what we said at your conference, and then there was a flurry of emails. I think our press reports later a week, I think they know everything, they need to know.

Well, as you mentioned, I think during the presentation, that you just gave. Year-to-date long term natural gas has increased over 15%, your market EBITDA, your open EBITDA has increased almost $1 billion, but the stock is down 17% year-to-date. Why isn't the company looking at doing $1 billion stock buyback to take advantage of the substantial dislocation between the stock price and the intrinsic value that's only increased over the last 12 months? In the past, NRG I think has been very creative and opportunistic in using hybrid securities converts and other strategies to create substantial buyback capacity. Why isn't the company taking advantage of this opportunity in the stock price right now?

Well I mean, John better than anyone that the direct answer to your question, is why we are not doing that is because of the limitations of restricted payment basket. So the real question is: the company's perpetual search for ways to free up more room in your restricted payment basket. I think what Clint was trying to say is that this is a very high level of focus for us. There are a variety of ways in which we can do that, and I think there's a slide back in the appendices that try to articulate that. Because there's been a lot of focus from buy side investors about that. From our perspective... from my personal perspective, it's an intolerable situation for me that the company sit here with $2.6 billion of liquidity, and we have the freedom to distribute and optimize way. Right now we have $180 million effective limitation, which I guess will free up little bit more by the third quarter. So, it's very high on our priority list. Certainly the idea of freeing up the restricted payment basket and then doing the share buyback that's something we seriously consider as well. I guess the question I would ask you is... my understanding is that Mirant from the middle of the $2.4 billion share buyback and sales in their stock seems to be dropping at the same pace as everyone else. So, I'd like to be persuaded that a major share buy back would be the fantasy for all our world. But maybe that's the debate we can have offline.

Well I think, as you pointed out David, Mirant is experiencing massive dark spread compression, so I think that's why their stock has dropped. And I think your company is obviously in a completely different situation, where the intrinsic value has actually increased substantially over the last seven to eighth months as opposed to having decreased. Because you Mirant and other company are short Eastern coal, while you obviously own lignite, PRB and also nuclear generating assets and yet your stock is still down 17% year-to-date. And that's the opportunity to create additional value that I am referring to. I am just a little bit confused as to why... what's the direction of the company's capital allocation program is going in. Because I feel the stocks materially undervalued get the company is thinking about using it as currency. And in my opinion the best investment that NRG has right now is on stock.

Well, I think John, you've got your opinion. And I could respond that. But I think at some point we need to take some other questions on the phone.

Okay, thank you.

Your next question comes from Dan Eggers, Credit Suisse. Please go ahead.

Hey, good morning. I think John covered a lot of the capital allocation business. Clint, I was wondering if you can just give a little more color on some of the mark-to-market losses in the collateral postings, given the movement in commodity prices. I guess since the close of the quarter, we've been probably down. Any inside you could share us for mark-to-market would be going in the third quarter and any trend in collateral since then?

Sure Dan. On the mark-to-market front, we've actually taken a pretty close look at that over the few weeks. Obviously there has been a significant decline in the gas market. And what retaining is based on calculations that we just run in the last couple of days. There are a lot of ineffectiveness and mark-to-market that we experienced during the second quarter is reversing itself in a pretty significant way. I think we are seeing what we would have expected to see with gas prices coming down as much as they have. So again mark-to-market looks like at this point with gas moving down is rehearsing itself quite meaningfully. On the collateral front, since the end of the quarter we've gotten about $60 million of net cash collateral back as a result of reduction in gas prices, so again moving in the direction that you would expect to see

And then just on the hedging effect and this was at all a tie to 2008 was reusable dim in 2009 and beyond the practice.

Really it was across the years. So it's not specific to 2008. There's effectiveness, kind of shrink strength basically throughout the program. And it really has to do with the fact that in all these years, when we looked at the changes in natural gas prices as of the end of the quarter on 6.30. We look at the change in gas prices and we look at the change in power prices and basically in all years what we saw is that natural gas prices during the quarter rose at a faster rate than power prices. And so that led to some degree of ineffectiveness rally throughout the hedge program.

Great, thank you.

Your next question comes from Lasan Johong from RBC Capital Markets. Please go ahead.

I am a little puzzled about the hedging strategy you adopted in second quarter. My understanding is... or has been that NRG prefers to lock away cash price volatility and keep its heat rate exposure open and in the current market, where dark spread compression, which I agree with David is kind of silly at this point and meaningless. Why would you hedge into that kind of dumb environment if you would driven by financial loans of the banks and other issues?

Lasan, on the hedging front, the hedges that we added during the second quarter along the gas price, so we are locking in higher powered price. We already have the fuel hedge. So we are locking in very strong margins by locking in the gas business.

But the point is that the power prices were understated relative to its heat... what it actually should be because of heat rate compression. Am I wrong about that?

Well, we left the heat rate position open. We hedged it with the GAAP, so... Right, we still keep the heat rates in upside, which is similar to what we did in the second quarter this year. We've kept the heat rate open and it benefited us by doing so.

So you bought the power and sold gas short.

No, we think we just sold gas.

You just sold gas. [Multiple speakers]

Okay, then have some... we can get into offline. Assuming the... I am seeing the sale of assets in international was in the discontinued offline; is that correct?

Yes, that's right.

Okay, great. That's it for me. Thank you very much.

Thanks Lasan.

Your next question comes from Andy Smith, JPMorgan. Please go ahead.

Thanks, good morning guys,

Good morning, Andy.

One of the things you guys could talk a little bit in Texas about, that we saw some pretty high cost in the balancing market versus certainly just overall with the moving gas or some commodity price move. Could you guys talk a little bit about what the driver in the quarter was for the performance? Was it really more that kind of 15 minute increment, peakers in the balancing market, was it just overall commodity price and then I had a follow up question on that too.

Well, I mean tempted with what made up the EBITDA increase for tax cutting was the full range more of output, better performance. We have the specific number on... I mean we try to isolate the number that came from the... sort of those pricing moments in May.

We'll we don't have a specific number for that. I don't think we historically given out specific numbers for gas plant EBITDA. But I think the way to think about it is during the second quarter, gas plant generation was up 24% year-over-year and then when you look at on-peak power prices in Texas during the quarter, I believe were up over a 100% about 130%. So, I think you can kind of use those as a proxy for the impact.

Yes, so we don't have that specific number. I know we can try and get it. Those moments got a lot of headlines that were actually relatively short lived in for just a few weeks, so I would... how much of an impact they would have. But we can discuss internally get back to you if that's an important number for you.

Well, I was looking what were your qualitative comment, and so it sounds like what you just said qualitatively, you would say it was overall better pricing and fundamentals impacts in the quarter.

Yes, and either way that I looked at it is qualitatively is that the price impact was the majority products were roughly three quarters and then the volume peak up due to better generation, better reliability, generation of the gas plants was the lesser part of it. So part of it was again the open heat rate position in and the pricing and then to a less extend the additional megawatt that we put out of the plant.

Okay, great. And then congestion charges were up fairly significantly in the second quarter as well. Do you guys have any exposure to that or did you have any exposure to that, but you have a positive or negative?

No, we sure didn't [ph].

No, we didn't have anything meaningful. I mean we do participate in the basis market in Texas, but we were not affected adversely on the increase congestion product.

Okay, great. Thanks guys.

Thanks, Andy.

The next question comes from Elizabeth Parrella from Merrill Lynch, Please go ahead.

Thank you. I wanted to ask regarding the RP basket. Clint, could you just remind us or tell us what they were at the end of June both the bank and bond calculations versus where we were in at the end of March?

Sure, Elizabeth. The RP basket and the bonds, right now stands at I think $184 million. Under the bank, it's $1.10 billion. And then at the end of the first quarter, I believe it was $150 million under the bonds. And I don't recall what it was under the bank.

Okay. And just a second question on different area. In the wake of care ruling, have you looked at the caring value of your emission allowances particularly the ones in Texas that you value... coming out of the Texas GenConn acquisition. Whether you need to take any impairment on those? And if you do will that go into the calculations of net income for the bond or RP basket?

Elizabeth, we have taken a look at that. We looked at both our NOX and SOX [ph] credit banks. And just to be thorough, the NOX credit that we have are not impacted by the care decision. Those are really poor kind of local Houston-Galveston area compliant. On the SOX front, as you mentioned really the only part of our bank that is affected by care are the other credits that we purchased as the part of the Texas GenConn transaction. We've looked at this over the past week, because we know that a number of other companies have faced this issue. And based on our existing carrying book value of those credit and based on our fundamental long-term view of what those credits are worth, we don't foresee any type of meaningful impairment, at this time. Obviously, we'll need to monitor that overtime. But I don't at this point see any type of meaningful impairment associated with us.

Okay. If there were impairment charges, they get included in the net income calculation for the bond warranty?

We need to look at that. That may be considered an extraordinary event, given what gives rise to that impairment, but that would be something that we have to look at more closely.

Okay, thank you.

Your next question comes from Michael Lapides from Goldman Sachs. Please go ahead.

Hey, guys congratulations on a really good quarter. When I ask you about RGGI, what are you expecting as your '09 RGGI costs? I am just trying to get your fundamental view over the... on kind of the dollar per ton pricing for RGGI credit.

Well, go ahead Mauricio.

Hi, Michael, this is Mauricio. I think there has been some price discovery on the over the counter market. We have seen price fall anywhere between $750 to $850 per ton. Actually our fundamental view is lower than that, and so I would say in probably in the neighborhood of $4 to $6 per ton range.

Okay, so if you are buying 12 million to 13 million tons for talk to near about $100 million.

Yes.

Michael, the way you should look at that on a cash basis, there are two things to consider; one is how much did it pass through in the marketplace show on and then the second point is, we have been monetizing some of our other excess pricing credits to offset some of those costs.

Okay. I have a question also and real quick one and I think about collateral cash posting. Under what scenario does the collateral that you've already posted year-to-date in offer term back you simply another spike in the gas prices?

Yes I think that's the case Michael. If gas prices continue to rise, then it wouldn't, but again it's really more of a the timing issue. Because as the underlying hedges roll off and realize that cash collateral will come back to us. So, I think it's just a matter of matter of timing. But again it may not come back to us in time that we expect the cash prices continue to rise.

Got it. Okay. Thank you guys.

Thanks, Michael.

Your next question comes from Chris Taylor, Evergreen Investments. Please go ahead.

Thanks. I am want to talk about slide 27. You are talking about being recession resistant. You don't see more analysis for price impact and obviously the last year recessions we have fairly low energy prices and how much could the amount of destruction fee due to high the prices as opposed to a recession. Have you got search analysis?

Well, we did have an analysis, which was based on historic... we didn't play it in here. But we tried to calculate it all the way through, some impact on natural gas prices. And again this is just sort of calculating based on sort of historic pattern. I think Mauricio, tell me what came about $0.30.

$0.35 to $0.50. But I mean this... as the calculation... we did the best we could. But that's what it came out to it. It's obviously highly speculative, but anyway.

So, which are your more vulnerable period, is it recession or high electricity prices that amounts to destruction?

More vulnerable to high electricity pricing?

In terms of your volume? Which are your volumes more sensitive to a recession impact or high electricity price impact?

I mean we are seeing the amount structuring gasoline logic...

I think we have started seeing more sensitive to our portfolio right now, it's gas, it's now gasoline.

I am not talking about your price impact; I am talking about your volume impact.

Well, we are hedged for the next couple of years. So the volume for our base is basically 90% plus of our generation comes from baseload. So this recession you will see the impact more of the intermediate, you don't get much generation.

Yes, I think as steep... a recession driven steep drop up in demand for natural gas got to be what would be most susceptible to. But since we take the benefit natural gas through sales of our baseload solid fuel plans, where we are heavily hedged for the next years, again that's least in our view in the expression that we think that were recession resistant. But if you are looking for one thing, it would be that recession driving reduction in natural demand for natural gas.

Thanks.

Your next question comes from Maury Sean [ph] from MFS. Please go ahead.

Good morning. Bob congratulations on a safety operations. Dave, I am going to give you a second chance from the Calpine question, thrown out there by John. We have an entity out there for the temporary management team; such a new folks on the financial side can't keep tracks who's been put there. And statements by you that comments that this issue would come to a close sooner than it has. Obviously there is a CEO there. The board seem to give you bit of highs then and both stocks have been hammered a bit and so we are in the wonderful land of uncertainty and I as John were actually in some respect put that the number one list of the concern. I appreciate the craziness of the market we are living at everyday. And the understanding of maintaining liquidity and given the RP basket and everything else put some constraints on things. But throwing uncertainty deal into a mix of the difficult market is not helping the cause. So I am going to give you second chance and try to help us better understand what is going on, and especially with the prospects of buying company that essentially has no management?

Well, Maury I've been here for four years; and for four years, we've been identified with one or another company in this industry. I can't remember the order whether we were Mirant, Reliant and now Calpine or some other order. But the fact that I said I am not going to comment on whether there are any discussions going on. We also tend to say that in the other way, which is I would say, there is always discussion going on with all people. We just don't comment on any type of transactions that's going. You can't read into that comment anything in particular about the Calpine situation. If there is uncertainty that concerns yourself and John Kiani about Calpine transaction that you don't like, again, I would refer back to the situation that existed at the end of the May. In terms of... at that point, we laid out what we thought was the strategic project for a transaction in the letter. And we said in terms of whether the numbers work, that was something that we would have to determine on due diligence. I think that the market have that question as well. You and John for Calpine number one ahead of the five phobias that I talked about today. That maybe the case, I mean this is why the frustrations of this market. I mean, no one really knows what's causing any of these things. I would only point out that, it's not just Calpine and NRG that has been hammered over the last two months; I think the entire sector has been hammered. And even the people who aren't rumored to be involved anything. And then the second point I would say is we are down 10% over the last 12 months. The Calpine thing is sort of came up in May, right? So maybe again you and John and I can take it offline. I would like to understand, why we didn't get the benefit of the favorable market conditions in terms of natural gas prices and other things over the last ten months prior to the Calpine announcement. But, I am not... I'm sure that this answer is unsatisfactory to you, but we just can't get into this. I don't know any company that comments on transactions that may or may not be happening before they have happened.

So you said... again you have said in order to have reduce something of that sort, you would have to do two or three weeks of due diligence at Calpine to understand various issues from contract hedges and everything else and none of that has changed.

None of... none that we would have to do something like that in order to understand their... no, I don't that is not our view point on that hasn't changed.

Okay, thank you.

Thank you.

And the last question comes from Nitin Dayya [ph] from Lehman Brothers. Please go ahead.

Good morning. Without asking the views on Calpine and if the transaction were to happen, how do you plan to refinance the Calpine, I know that Calpine that and if you have given any thoughts to that?

I think we've exhausted the Calpine topic today, so...

Fair enough. So, just on the RP basket issue again. Obliviously the bonds are about 96, 97 and would you again consider going back to the bondholders to seek their amendment there also just based on where the bonds are trading versus the CDS. I mean it almost seems... market almost seems to expect that you would actually seek to relax that. Could you comment on that?

Our bondholders are very significant part of our capital structure and I have always been constructive in dialogs obviously. We talked today about the RP restrictions being something that we're focused on. And I guess, all I would say is that we are certainly always open to a constructive dialog with any member of our investment community including the bondholders.

Is that the tax for possibility is on the table?

I am not prepared right now to suggest that that we are preparing any type of formal approach. All I would say is that that obviously is something that we thought about in the past and we will continue to consider that in future.

And also on slide partly the restricted payment 101, when you look at the various clauses under the indenture, where RP could be built. I suppose outside of that issuance, does equity earnings, cash distributions from deconsolidated entities? Do any of your entities have that capacity?

Not at this point. I mean what that referring to is if we have an unrestricted subsidiary, and that's a definition under the indenture that to the extent that we receive any cash distribution from them that that would increase the basket dollar for dollar. At this point, the only unrestricted subsidiaries that we have are the CSF I and CSF II structures. And I don't perceive that cash distributions being a dynamic within the context of those...

Okay. Thank you very much.

Okay, Jennifer. We've gone a little bit longer. But thank everyone for participating in the call and we look forward to talking to you again in the next quarter. Thank you.

Ladies and gentlemen, this does conclude today's conference call. Thank you very much for your participation; and have a nice day.