Good day, ladies and gentlemen, and welcome to the NRG Energy First Quarter 2010 Earnings Conference Call. My name is Channel, and I'll be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Ms. Nahla Azmy. Please proceed.

Thank you, Channel. Good morning, and welcome to our first quarter 2010 earnings call. This call is being broadcast live over the phone and from our website at www.nrgenergy.com. You can access the call presentation and press release through a link on the Investor Relations page of our website. A replay of the call will also be available on our website. This call, including the formal presentation and question-and-answer session, will be limited to one hour. In the interest of time, we ask that you please limit yourself to one question with just one follow up. And now for the obligatory Safe Harbor statement. During the course of this morning's presentation, management will reiterate forward-looking statements made in today's press release regarding future events and financial performance. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important risk factors contained in our press release and other filings with the SEC that could cause actual results to differ materially from those in the forward-looking statements in this press release and this conference call. In addition, please note that the date of this conference call is May 10, 2010, and any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events, except as required by law. During this morning's call, we will refer to both GAAP and non-GAAP financial measures of the company's operating 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. And now with that, I'm pleased to turn the call over to David Crane, NRG's President and Chief Executive Officer.

Well, thank you, Nahla, and let me add my welcome to everyone. Good morning. Welcome to our first quarter 2010. While I'm speaking to you from Tokyo, joining me in Princeton and speaking on this call are John Ragan, our Chief Operating Officer; Gerry Luterman and Chris Schade, our outgoing and incoming Chief Financial Officers. Also, with us in Princeton and available to answer any specific questions you might ask on the call are Mauricio Gutierrez, who runs our Commercial Operations business; and Jason Few, who is responsible for our Retail business. So let's begin. Ladies and gentlemen, the shareholders of NRG, thank you for being patient and waiting until the very end of the first quarter reporting period for our earnings release. Today, we're pleased to bring you exciting news, both about the extraordinary financial results, which we achieved in the first quarter 2010 and also about the agreement signed today here in Tokyo with Tokyo Electric Power Company to invest in the South Texas Project, STP 3 & 4. First, with respect to the quarter, Gerry and Chris will report to you more fulsomely in a few minutes. But I simply want to emphasize you the magnitude and significance of what the women and men who make up NRG have achieved: a 26% increase in the first quarter compared to what was considered by most to be a very strong first quarter 2009. Our $601 million of adjusted EBITDA for the quarter was fueled by strong operating performance across all regions and all business segments. Of course, the two factors which made this number most possible in the face of a declining commodity price environment and generally weak economic conditions were our effective and farsighted forward hedging program and the exceptional performance, financially and operationally, of our Retail…

Thank you, David. Good morning, everyone. During Q1, NRG continue to sustain solid operating and commercial performance. Slide 7, summarizes these events for the quarter. Beginning with safety, the company has started 2010 with a very positive record by achieving top decile performance with a quarterly OSHA [Occupational Safety and Health Administration] recordable rate of 0.85. We had 31 plants that had no recordable incidents and sustained one of our longest continuous stretches without a recordable incident across the entire fleet. We believe the disciplined commitment and emphasis on safety sets the cultural foundation required at our company and provides the catalyst to achieve superior operating results. Moving on to our fleet operating performance. Baseload equivalent availability during the quarter was 88%, which was lower than the 2009 operating result. This was due to several unplanned outages in January and February, which I will discuss on the next slide. We continue to make progress on our construction projects in the Northeast. The Indian River environmental control project has been re-scoped for Unit 4 only, following the cancellation of the Unit 3 portion earlier in the quarter. The Devon repowering project is scheduled for completion in June and the commissioning phase of this project is now underway. On the renewables front, we have completed all of our operational and commercial due diligence in the South Trent wind project, and awaits the completion of the Texas PUCT [Public Utility Commission of Texas] approval process and certain tax and financing requirements necessary to close this transaction. Our commercial operations and retail organizations continue to maximize value for NRG by combining the strengths of our Wholesale Generation and Retail portfolios. Additionally, we have continued to be successful in winning additional load contracts in the regions where we have generation resources. These longer-term contracts provide…

Thank you, John. Good morning, and thank you once again for joining us today to discuss NRG's first quarter 2010 financial results. Since this is my last conference call as Interim Chief Financial Officer, a role I greatly enjoyed, I will talk to this quarter's actual results, while Chris Schade, my very able replacement, will address 2010 guidance and his priorities as NRG's new Chief Financial Officer. I will continue to serve on the NRG Board of Directors. Turning to our financial summary on Slide 15. The company delivered record financial results in the quarter with adjusted EBITDA of $601 million, a 26% increase from a year ago. This increase was driven by the excellent performance of Reliant Energy, which contributed $190 million of adjusted EBITDA. During this quarter, the company made payments on its Term Loan B, as well as settling Common Stock Finance I or CSF I, resulting in its total outflow of $471 million. It should be noted that the decision to settle the CSF I four months earlier than planned resulted in savings of $7 million. Total liquidity now stands at $3.2 billion, including over $1.8 billion in cash. Chris will be discussing in more detail the adjusted 2010 guidance. But in summary, we are leaving EBITDA guidance unchanged at $2.2 billion, and increasing free cash flow guidance by $112 million to $462 million. Turning to Slide 16. The quarter-over-quarter adjusted EBITDA bridge or waterfall slide is presented. This slide reinforces the complementary benefits of owning both Wholesale Generation and Retail in the state of Texas, as well as the two businesses contributed a net favorable variance of a $142 million quarter-over-quarter. Reliant Energy had a $190 million of adjusted EBITDA for the quarter, driven by colder-than-normal weather with a 31% increase [indiscernible]. Reliant also benefited…

Thank you, Gerry. Before turning to the next slide, I would like to say that I'm very happy to be here at NRG and look forward to working with David and his team, as we continue a proven track record of business execution and prudent financial management. I would like to start with our 2010 outlook on Slide 21. The company recorded record results in the first quarter while on a low gas price environment. These results reinforced our Texas-based strategy of owning both wholesale and retail and as such, we are reaffirming our full year EBITDA guidance of $2.2 billion. The company generally has not changed guidance during the first quarter as it is still early in the year, and the summer months can be primary drivers of full year results. With that said, the company is off to a very good start. I would like just to briefly cover our capital expenditure plans for 2010, our Repowering Investments guidance of $92 million includes $54 million into GenConn Energy, a 50-50 joint venture with United Illuminating as the repowered facility of Devon, Connecticut is expected to soon start commercial operations and contribute to results this year. $40 million for the installation of the combined heat and power system at the new University Medical Center at Princeton at Plainsboro, $10 million for demolition work at our El Segundo, California facility, $7 million for electric vehicles and $5 million for offshore met [meteorological] towers as part of our offshore wind initiative. As for our nuclear development program, our net cash spend is estimated to be $328 million. With that, free cash flow is forecast to be higher than projected last quarter by $112 million to $462 million, reflecting the anticipated proceeds from Tokyo Electric, which David will cover in greater detail…

Well, thank you, Chris, and John. In particular, I want to thank you, Gerry, for pitching in for the last six months and we look forward to continuing to work with you on the Board. Now turning back to the presentation in nuclear development on Slide 24. The current status of the STP 3 & 4 project is really quite simple. Everything depends on actions, which will be taken in Washington sometime in the next several weeks. Almost two years after we filed our application for a Federal loan guarantee and a full five years after such loan guarantees were authorized by the Energy Policy Act of 2005, which is what triggered our development of STP 3 & 4, we are now in the absolute final stage of DOE consideration of our loan guarantee application. As the DOE process has been both very demanding and highly iterative, we are confident that we have done everything reasonably requested of us to satisfy the government's concerns, which have been ably and forcedly expressed by the DOE staff and their consultants on behalf of the American taxpayer. An Act, which has been focused on ensuring the credit quality of the proposed loan guarantee. As such and while we have no assurance that at this time from the DOE or from any other branch of the U.S. government that we will be awarded a guarantee, we are and we remain confident in our position. The issue that exists is one of appropriations and timing. While the Obama administration is seeking to expand the Nuclear Loan Guarantee Program in the next budget cycle. The next budget cycle is months away and right now, they have two projects, our project and Constellation's Calvert Cliffs project, which are at the same place in the process and each…

[Operator Instructions] Your first question comes from the line of Daniel Eggers of Crédit Suisse.

David, I guess just kind of in this conversation, just to make sure we're fully clear. Your view is that you're not going to go forward with South Texas without getting the Federal loan guarantees, this time through and the next few weeks. And if you do not get those, then you go on a cold stop. Does that mean you would reconsider going forward in building if the President's budget is expanded?

Obviously, Dan, it's a good question, it's a hypothetical question. I mean, I think if we do not get awarded the loan guarantee at this time, probably what we would do and this is first addressing your characterization as a cold stop, is that and we would have to see what the cost of this would be. But we would probably shut down everything except we might keep the license process going. Our initial estimate is just see the license through would cost less than $10 million a year. And given where we are and the fact that certainly, one thing we would be doing would be trying to mitigate the amount we've spent through sort of selling the intellectual property to other people who might want to be pursuing that type of project. We probably would try and carry through to get the license done, unless it was too expensive. Apart from that, if they came back a year from now, when the -- further money has been authorized and said, you can have your loan guarantee now and we basically wound down everything, we would have to look at them. We would have to look at the circumstances at the time. One thing is when you unwind an effort like this, as they say, it's hard to put Humpty Dumpty back together again. So I wouldn't be overly confident that we could come back and resurrect the project a year from now.

David, one of the lines in your presentation suggests that maybe some sort of additional appropriation on the short-run basis to give both of you and Constellation, your full loan guarantees now. Is that something you're hearing actual work on or it's just a hope as a way of trying to keep two good projects alive?

Well, I think there's a lot of work being done. I think there are a lot of people in Washington, Certainly, people in our end and I would presume on Constellation, that are suggesting various ways that this dilemma could be solved. And additional appropriations outside the normal budget cycle is probably most prominent on that list, as the government does do appropriations outside of the budget cycle. And while the amount of money that we would be talking about, the shortfall of the $14 billion needed minus the $10 billion they have, $4 billion sounds like a very large number. My understanding of the appropriations that they would actually have to put through the process, would actually just be essentially the cost of the loan premium, which is a number that I've heard -- that less than $100 million. So that is definitely not insurmountable. But at this point, I'm not in a position to preclude any of the variety of ways that people inside and outside the government have suggested that, for the government to resolve this conundrum. We'd be happy with any of the ones that work.

Your next question comes from the line of Ameet Thakkar of Bank of America.

David, could you just kind of help us kind of reconcile, I guess, the seemingly different, I guess, dollar per KW valuations that CPS recently paid, and then what TEPCO is paying today? And then I guess kind of what the original transaction with Toshiba. Could you kind of help us understand that or how we should at least look at it?

Well, I'm not sure, Ameet, I saw the -- I think that the number that TEPCO has paid, it's quite comparable to the number that Toshiba paid a couple of years ago. I've seen attempts to analyze it against what CPS or what we have -- what do you mean by what we proposed to pay CPS, the $80 million that we would pay if we get the loan guarantee?

The $80 million that you would pay to them to get the loan guarantee program. Plus, I mean they're going to get, I guess, roughly 7% or 8% of the capacity of the project in return for the capital if they had kind of spent when they kind of exited the project. I believe that was around $300 million?

Ameet, it's very to do this without sort of going through a spreadsheet. And we would be happy to make a best effort at doing that. Because one of the problem is, with development is that the money being invested at this stage is neither very valuable or it's really worth nothing. It's fairly binary. I mean, what I would tell you is on its phase, us paying $80 million to CPS for their 40-some percent interest that we're gaining from them. Obviously, TEPCO paying $280 million to get 18% of project, one looks much better than the other. But it's really hard to compare. As you say, then you have this sort of present value, what the carried interest that CPS would have starting in 2017. So we will try and put some thing like that together. But it's very much an apple and orange comparison.

Your next question comes from the line of Neel Mitra of Simmons & Company.

I was wondering if you can comment on the chances that the DOE would split a loan guarantee with you and Constellation, and what exactly would happen if that were the case? Would you proceed or would you stop the project at that point?

Well, I think it's a very, very good question, Neel. And I would say that I think the chance of the DOE and I could be wrong about this. Again, it's the government and I'm not necessarily an expert. But certainly, we have never gotten any indication from the DOE that they would do that. Because if you think about the government's position, the people at the DOE and then the government generally have worked this hard on this over the last couple of years as we have. And I think that the last thing that the government wants to do is announce two partial awards, two $5 billion awards for two companies that were seeking $7 billion. And then have both companies respond the next day by essentially suspending their project. Because while $5 billion sounds like a large number, if you think of the delta between the $5 billion and the $7-plus billion, that's an enormous amount of equity to raise. And so we again, we cannot speak for Constellation even though I've tried to do that several times during this call. But on behalf of NRG and NINA's perspective, we have run the numbers and we've conveyed to the government that we cannot go forward with half of the existing money.

Are the put options that you're using to hedge, are they being reflected in the hedge percentages now going forward?

No, They're not reflected yet. I think, when we go into our second quarter earnings call, you will see it.

Your next question comes from Brandon Blossman of Tudor, Pickering, Holt.

I guess just following up Neel's question on hedging. The incremental hedge position for '10, does that reflect a reduction in plant generation or is that actually incremental positions?

No, you're right. I mean, that reflects basically the lower generation that we're seeing because of lower gas prices. At this point, as we're going into the summer season, we have decided to keep the imbalance between our hedges and our respective generation and we will rebalance as we go through the summer.

Jason, can you give any color or comment on quarter-over-quarter Mass, Retail margins? I mean you obviously, a stellar performance in Texas retail this quarter.

We don't give margins between Mass and C&I. But overall, we talked about our margins in the November Analyst Meeting, we talked about being able to maintain $20 margins throughout 2010. And obviously to the first quarter, we've been able to perform better than that. But we really do try to manage against the value equation and take the opportunities when they present themselves to perform better than we outlook back in November. And so during the first quarter, we're able to achieve that between both the Mass and the C&I business.

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

David, on the additional 10% that TEPCO has an option on for the $30 million, are there any other terms associated with that other than the contingency for the loan guarantees?

As you could tell from my -- the way that I expressed it. I take TEPCO's investment to be the full amount, which is essentially paid in two stages. There are no conditions precedent, attached to the second piece, the second tranche. But obviously, and as you saw the way it was structured, they are paying $30 million as part of the first payment in order to have that option. So certainly, legally, contractually, they have the right to stick at the original amount. But certainly, I have no expectation that if the project is proceeding, they will do that, they will come forward with the second portion. Because the comfort zone in terms of the size of the project they wanted was in the 20% range.

I'm not sure if this question is for Chris or Gerry. In reading or understanding your comments around the RP basket, it sort of sounded as if you are backing away from a commitment to sort of solve that this year. Did I misinterpret that or is it a little bit unfocused?

Well, I'll turn that one to Chris. But, Jay, I would say I don't think we've ever made a firm commitment to actually at any price get the RP basket issue resolved. But you're right, just to make sure that semantically we're on the same page, that we certainly have said we would undertake to give it the old college try, to do it at a reasonable price, if we could do it at a reasonable price. But, Chris?

I just amplify what David said. Certainly, I understand the issue at hand. And I will be looking into it in the very near term to make a decision. But any decision we make, as I said in my prepared remarks, is going to be based on the overall business and the current market we're operating.

Your next question comes from the line of Michael Lapides of Goldman Sachs.

Can you quantify the impact of weather on the Retail business during the quarter? And two, am I reading that the Padomo win gain on sales is included in the adjusted EBITDA number?

I'll take the easy answer, Michael, and then ask Jason do the -- well, actually they're both pretty easy. But he'll do the first one. The second one, the answer is yes. That the gain on sale at Padomo is in the adjusted EBITDA. Jason, do you want to talk about the impact of weather?

Sure, David. We saw a colder winter than normal in Texas. And so that created an opportunity for us against not only our month-to-month customer base but our fixed-price customers on the Mass side, actually, expand margins given the lower gas prices. And so the one thing about weather is that it has more of an immediate impact in our performance even though we've showed strong results with respect to our attrition rate on our customer count. Weather has had a much bigger impact on our first quarter results given the colder winter.

Can you quantify that in either terawatt hours or in kind of dollars, millions, just throw some numbers around that?

What I'd like to do maybe we can take that offline and I'll take you through it in some more detail.

That concludes the Q&A session. I now like to turn the call back over to management.

Chanel, I think that as you say we're done. We appreciate everyone taking the time this morning. And we look forward to speaking with you again next quarter. Thank you very much.

Ladies and gentlemen, that concludes the presentation. Thank you, for your participation. You may now disconnect. Have a great day.