Reliant Energy Reports Second Quarter 2008 Results

Reliant Energy, Inc. reported open EBITDA of $62 million for the second quarter of 2008, compared to $193 million for the second quarter of 2007. Lower retail contribution margin driven primarily by extraordinary market conditions in ERCOT significantly offset improvements in open wholesale contribution margin. Adjusted EBITDA, which includes the effect of historical and operational wholesale hedges and gains on sales of assets and emission and exchange allowances, was $153 million for the second quarter of 2008, compared to $165 million for the second quarter of 2007. While the company saw an improvement in historical and operational hedges and open wholesale contribution margin, the decline in retail contribution margin resulted in a decrease in adjusted EBITDA compared to the prior year. "We have made very good progress implementing our strategic priorities and are well-positioned in light of current market conditions,” said Mark Jacobs, president and chief executive officer. "During the quarter, the retail business delivered disappointing financial results driven by extreme weather and transmission constraints in the Texas electricity market. While these factors impact our 2008 results, we believe we have taken the necessary steps to reduce their potential magnitude going forward. Reliant Energy continues to offer a robust value proposition and expects to generate significant free cash flow.” Free cash flow provided by continuing operations was $130 million for the first half of 2008, compared to a free cash flow used in continuing operations of $142 million for the same period in 2007. The improvement was primarily due to higher adjusted EBITDA and lower interest payments from reduced debt levels. Income from continuing operations before income taxes for the second quarter of 2008 was $582 million, compared to a loss of $456 million for the second quarter of 2007. These 2008 GAAP results include net unrealized gains from energy derivatives of $570 million. The reported numbers for 2007 include net unrealized losses from energy derivatives of $326 million and a $71 million charge for debt extinguishments. Interest expense, net declined to $53 million for the second quarter of 2008, compared to $114 million for the second quarter of 2007. The decline was primarily related to the write off of deferred financing costs in 2007 which was not repeated in 2008 as well as lower debt levels in 2008. Operating cash flow from continuing operations was $182 million for the first six months of 2008, compared to $24 million for the same period of 2007. Open EBITDA was $234 million for the first six months of 2008, compared to $307 million for the same period of 2007. The decline was due to the same factors as described above for the second quarter. Adjusted EBITDA was $371 million for the first six months of 2008, compared to $246 million for the second quarter of 2007. Improvement in historical and operational hedges and improvements in open wholesale contribution margin more than offset the decline in retail contribution margin. Income from continuing operations before income taxes for the first six months of 2008 was $1,182 million, compared to a loss of $44 million for the first six months of 2007. These 2008 GAAP results include net unrealized gains from energy derivatives of $1,128 million and a $34 million charge for western states litigation and similar settlements. The reported numbers for 2007 include net unrealized gains from energy derivatives of $196 million, a $22 million charge for western states litigation and similar settlements and a $71 million charge for debt extinguishments. OUTLOOK Reliant Energy’s outlook for open EBITDA is $1,056 million, $1,581 million and $1,478 million for the years ending December 31, 2008, 2009 and 2010, respectively. Adjusted EBITDA, which includes the impact of historical and operational wholesale hedges and gains on the sales of assets and emission and exchange allowances, net is $1,535 million, $1,756 million and $1,535 million for the same periods. The outlook for free cash flow provided by continuing operations is $834 million, $983 million and $831 million for the years ending December 31, 2008, 2009 and 2010, respectively. This outlook is based on forward commodity prices as of June 20, 2008, assumptions and estimates by Reliant Energy, and excludes Bighorn financial results beginning in the fourth quarter of 2008. Open EBITDA Outlook Reconciliation   ($ millions)   2007A   2008E   2009E   2010E Income from continuing operations before income taxes $493 $1,374 $831 $961 Unrealized (gains) losses on energy derivatives (445 ) (446 ) 298 (12 ) Western states litigation and similar settlements 22 34 --- --- Debt extinguishments 73 1 --- --- Depreciation and amortization1 424 362 475 452 Interest expense, net 315     210     152     134   Adjusted EBITDA $882 $1,535 $1,756 $1,535 Historical and operational wholesale hedges 92 (411 ) (175 ) (57 ) Gains on sales of assets and emission and exchange allowances, net (26 )   (68 )   ---     ---   Open EBITDA $948 $1,056 $1,581 $1,478   1. Includes CAIR’s annual NOx for 2009 and 2010 and SO2 2-for-1 step down in 2010, which were vacated in July 2008 by the D.C. Circuit Court of Appeals. Free Cash Flow from Continuing Operations Outlook Reconciliation   ($ millions)   2007A   2008E   2009E   2010E Operating cash flow from continuing operations 1 $755 $1,180 $1,431 $1,104 Western states litigation and similar settlements payments 57 34 --- --- Change in margin deposits, net (297 )   17     (41 )   (25 ) Adjusted cash flow provided by continuing operations $515 $1,231 $1,390 $1,079 Maintenance capital expenditures (85 ) (87 ) (83 ) (74 ) Environmental capital expenditures and capitalized interest 2 (104 ) (251 ) (139 ) (23 ) Emission and exchange allowances activity, net3 (85 )   (59 )   (185 )   (151 ) Free cash flow provided by continuing operations $241 $834 $983 $831   1. Outlook assumes no changes in working capital and net operating loss is fully utilized during 2009. 2. Estimate represents the low end of the range. 3. Includes CAIR’s annual NOx for 2009 and 2010 and SO2 2-for-1 step down in 2010, which were vacated in July 2008 by the D.C. Circuit Court of Appeals. NON-GAAP FINANCIAL MEASURES This press release and the attached financial tables include the following non-GAAP financial measures: Retail gross margin Retail contribution margin Open energy gross margin Open wholesale gross margin Open wholesale contribution margin EBITDA Adjusted EBITDA Open EBITDA Adjusted cash flow provided by continuing operations Free cash flow provided by continuing operations Gross 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. WEBCAST OF EARNINGS CONFERENCE CALL Reliant Energy has scheduled its second quarter 2008 earnings conference call for Tuesday, August 5, 2008, at 7 a.m. CT. Interested parties may listen to a live audio broadcast of the conference call at 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. (NYSE:RRI) based in Houston, provides electricity and energy services to retail and wholesale customers in the United States. The company provides service to approximately 1.8 million retail electricity customers primarily in Texas, including residential and small business customers. Reliant also serves commercial, industrial, governmental and institutional customers in Delaware, Illinois, Maryland, New Jersey, New York, Pennsylvania, and Washington, D.C. The company is one of the largest independent power producers in the nation with more than 15,000 megawatts of power generation capacity across the United States. These strategically located generating assets use 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, capital structure and other financial items, and our plans and objectives for future operations or about our future economic performance, transactions and dispositions and financings and approvals 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, regulatory and/or market 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 (Unaudited)           Three Months Ended June 30, Six Months Ended June 30,   2008     2007     2008     2007   (thousands of dollars, except per share amounts) Revenues: Revenues (including $5,627, $(10,848), $(6,957) and $3,722 unrealized gains (losses)) (including $145,592, $0, $253,001 and $0 from affiliates) $ 3,423,535   $ 2,649,915   $ 6,238,959   $ 5,012,516   Expenses: Cost of sales (including $564,562, $(315,497), $1,135,445 and $192,162 unrealized gains (losses)) (including $121,134, $0, $200,130 and $0 from affiliates) 2,408,849 2,475,716 4,160,521 3,919,207 Operation and maintenance 229,423 233,966 441,901 464,707 Selling, general and administrative 85,414 103,084 161,064 190,681 Western states litigation and similar settlements - - 34,000 22,000 Gains on sales of assets and emission and exchange allowances, net (22,312 ) (1,727 ) (22,923 ) (1,727 ) Depreciation and amortization   88,775     110,603     177,369     202,572   Total operating expense   2,790,149     2,921,642     4,951,932     4,797,440   Operating Income (Loss)   633,386     (271,727 )   1,287,027     215,076   Other Income (Expense): Income of equity investment, net 988 1,366 1,195 2,526 Debt extinguishments - (71,269 ) (423 ) (71,269 ) Other, net 90 (574 ) 26 494 Interest expense (63,230 ) (121,975 ) (126,331 ) (209,045 ) Interest income   10,747     8,232     20,251     18,696   Total other expense   (51,405 )   (184,220 )   (105,282 )   (258,598 )   Income (Loss) from Continuing Operations Before Income Taxes 581,981 (455,947 ) 1,181,745 (43,522 ) Income tax expense (benefit)   223,122     (174,884 )   451,909     (22,822 )   Income (Loss) from Continuing Operations 358,859 (281,063 ) 729,836 (20,700 ) Income (loss) from discontinued operations   (171 )   (1,889 )   6,064     (3,541 ) Net Income (Loss) $ 358,688   $ (282,952 ) $ 735,900   $ (24,241 )   Basic Earnings Per Share: Income (loss) from continuing operations $ 1.04 $ (0.82 ) $ 2.11 $ (0.06 ) Income (loss) from discontinued operations   (0.01 )   (0.01 )   0.02     (0.01 ) Net income (loss) $ 1.03   $ (0.83 ) $ 2.13   $ (0.07 )   Diluted Earnings Per Share: Income (loss) from continuing operations $ 1.01 $ (0.82 ) $ 2.06 $ (0.06 ) Income (loss) from discontinued operations   -     (0.01 )   0.02     (0.01 ) Net income (loss) $ 1.01   $ (0.83 ) $ 2.08   $ (0.07 )   Weighted Average Common Shares Outstanding (in thousands): - Basic 346,616 342,074 346,017 340,717 - Diluted 354,054 342,074 354,078 340,717     Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007. Reliant Energy, Inc. and Subsidiaries Results of Operations by Segment - Adjusted and Open (Unaudited)               Three Months Ended June 30, Six Months Ended June 30,   2008     2007   Change   2008     2007   Change (millions of dollars) Retail Energy: Revenues $ 2,410 $ 1,994 $ 416 $ 4,345 $ 3,695 $ 650 Cost of sales 1,841 2,117 (276 ) 3,083 3,026 57 Unrealized (gains) losses on energy derivatives   (502 )   360     (862 )   (1,030 )   (256 )   (774 ) Retail gross margin (1) 67 237 (170 ) 232 413 (181 )   Operation and maintenance 63 60 3 123 121 2 Selling and marketing 38 30 8 70 60 10 Bad debt expense   6     21     (15 )   13     38     (25 ) Retail contribution margin (40 ) 126 (166 ) 26 194 (168 )   Unrealized gains (losses) on energy derivatives   502     (360 )   862     1,030     256     774   Contribution margin, including unrealized gains/losses on energy derivatives (2) 462 (234 ) 696 1,056 450 606   Wholesale Energy: Revenues $ 1,097 $ 797 $ 300 $ 2,024 $ 1,545 $ 479 Cost of sales 652 500 152 1,209 1,121 88 Historical and operational wholesale hedges (69 ) 30 (99 ) (114 ) 63 (177 ) Unrealized (gains) losses on energy derivatives   (68 )   (34 )   (34 )   (98 )   60     (158 ) Open wholesale gross margin (1) 308 293 15 603 547 56   Operation and maintenance 166 175 (9 ) 318 345 (27 ) Bad debt expense   -     -     -     1     (1 )   2   Open wholesale contribution margin 142 118 24 284 203 81   Historical and operational wholesale hedges 69 (30 ) 99 114 (63 ) 177 Unrealized gains (losses) on energy derivatives   68     34     34     98     (60 )   158   Contribution margin, including historical and operational wholesale hedges and unrealized gains/losses on energy derivatives (2) 279 122 157 496 80 416   Other Operations: Revenues $ 3 $ 4 $ (1 ) $ 7 $ 7 $ - Cost of sales - - - - - - Operation and maintenance   1     -     1     4     1     3   Other operations contribution margin (2) 2 4 (2 ) 3 6 (3 )   Eliminations: Revenues $ (86 ) $ (145 ) $ 59 $ (137 ) $ (235 ) $ 98 Cost of sales (83 ) (141 ) 58 (131 ) (228 ) 97 Operation and maintenance   (1 )   (2 )   1     (3 )   (3 )   -   Total (2 ) (2 ) - (3 ) (4 ) 1   Consolidated: Retail contribution margin $ (40 ) $ 126 $ (166 ) $ 26 $ 194 $ (168 ) Open wholesale contribution margin 142 118 24 284 203 81 Other operations contribution margin 2 4 (2 ) 3 6 (3 ) Eliminations   (2 )   (2 )   -     (3 )   (4 )   1   Total 102 246 (144 ) 310 399 (89 )   Other general and administrative (41 ) (54 ) 13 (77 ) (95 ) 18 Income of equity investment, net 1 2 (1 ) 1 3 (2 ) Other, net   -     (1 )   1     -     -     -   Open EBITDA   62     193     (131 )   234     307     (73 )   Historical and operational wholesale hedges 69 (30 ) 99 114 (63 ) 177 Gains on sales of assets and emission and exchange allowances, net   22     2     20     23     2     21   Adjusted EBITDA   153     165     (12 )   371     246     125     Unrealized gains (losses) on energy derivatives 570 (326 ) 896 1,128 196 932 Western states litigation and similar settlements - - - (34 ) (22 ) (12 ) Debt extinguishments   -     (71 )   71     -     (71 )   71   EBITDA   723     (232 )   955     1,465     349     1,116     Depreciation and amortization (88 ) (110 ) 22 (177 ) (202 ) 25 Interest expense (63 ) (122 ) 59 (126 ) (209 ) 83 Interest income   10     8     2     20     18     2   Income (loss) from continuing operations before income taxes $ 582   $ (456 ) $ 1,038   $ 1,182   $ (44 ) $ 1,226       (1) Gross margin (revenues less cost of sales) excludes depreciation, amortization, labor and other product costs. (2) 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, 2007. Reliant Energy, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited)       June 30, 2008 December 31, 2007 ASSETS (thousands of dollars) Current Assets: Cash and cash equivalents $ 797,223 $ 754,962 Restricted cash 7,086 3,251 Accounts and notes receivable, principally customer, net of allowance of $19,497 and $36,724 1,504,054 1,082,746 Inventory 330,799 285,408 Derivative assets 3,896,022 663,049 Margin deposits 203,284 139,834 Investment in and receivables from Channelview, net 84,728 83,253 Prepayments and other current assets 129,332 218,873 Assets held for sale 452,857 - Current assets of discontinued operations   -     2,133   Total current assets   7,405,385     3,233,509   Property, plant and equipment, gross 6,507,625 6,852,170 Accumulated depreciation   (1,692,618 )   (1,629,953 ) Property, Plant and Equipment, net   4,815,007     5,222,217     Other Assets: Goodwill, net 351,634 379,644 Other intangibles, net 394,105 405,338 Derivative assets 1,406,213 376,535 Prepaid lease 262,489 270,133 Other   233,126     304,424   Total other assets   2,647,567     1,736,074   Total Assets $ 14,867,959   $ 10,191,800       LIABILITIES AND EQUITY   Current Liabilities: Current portion of long-term debt and short-term borrowings $ 24,467 $ 52,546 Accounts payable, principally trade 1,188,571 687,046 Derivative liabilities 3,066,290 885,346 Margin deposits 9,100 250 Other 607,588 426,839 Liabilities held for sale 53,206 - Current liabilities of discontinued operations   4,766     -   Total current liabilities 4,953,988 2,052,027   Other Liabilities: Derivative liabilities 1,385,211 473,516 Other 399,584 278,641 Long-term liabilities of discontinued operations   3,542     3,542   Total other liabilities 1,788,337 755,699   Long-term Debt 2,877,848 2,902,346 Commitments and Contingencies Temporary Equity Stock-based Compensation 5,603 4,694 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; 347,813,336 and 344,579,508 issued) 109 106 Additional paid-in capital 6,228,514 6,215,512 Accumulated deficit (899,626 ) (1,635,526 ) Accumulated other comprehensive loss   (86,814 )   (103,058 ) Total stockholders' equity   5,242,183     4,477,034   Total Liabilities and Equity $ 14,867,959   $ 10,191,800       Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007. Reliant Energy, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)     Six Months Ended June 30,   2008     2007   (thousands of dollars) Cash Flows from Operating Activities: Net income (loss) $ 735,900 $ (24,241 ) (Income) loss from discontinued operations   (6,064 )   3,541   Net income (loss) from continuing operations 729,836 (20,700 ) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Depreciation and amortization 177,369 202,572 Deferred income taxes 430,817 (30,116 ) Net changes in energy derivatives (1,105,625 ) (166,400 ) Amortization of deferred financing costs 4,376 45,443 Gains on sales of assets and emission and exchange allowances, net (22,923 ) (1,727 ) Debt extinguishments 423 71,269 Western states litigation and similar settlements 34,000 - Other, net (145 ) 6,364 Changes in other assets and liabilities: Accounts and notes receivable, net (435,848 ) (212,797 ) Change in notes, receivables and payables, with affiliates, net (5,440 ) - Inventory (47,936 ) (18,390 ) Margin deposits, net (54,600 ) 112,646 Net derivative assets and liabilities (38,594 ) (27,380 ) Western states litigation and similar settlements payments - (35,000 ) Accounts payable 487,656 206,017 Other current assets (28,343 ) (24,432 ) Other assets 19,357 (2,980 ) Taxes payable/receivable 22,749 (7,444 ) Other current liabilities 15,575 (75,353 ) Other liabilities   (1,174 )   2,493   Net cash provided by continuing operations from operating activities 181,530 24,085 Net cash provided by (used in) discontinued operations from operating activities   9,332     (2,540 ) Net cash provided by operating activities   190,862     21,545   Cash Flows from Investing Activities: Capital expenditures (117,130 ) (99,172 ) Proceeds from sales of emission and exchange allowances 28,420 3,346 Purchases of emission allowances (17,644 ) (14,127 ) Restricted cash (3,835 ) 19,646 Other, net   1,435     2,130   Net cash used in investing activities   (108,754 )   (88,177 ) Cash Flows from Financing Activities: Payments of long-term debt (45,193 ) (1,465,891 ) Proceeds from long-term debt - 1,300,000 Increase in short-term borrowings and revolving credit facilities, net - 6,554 Payments of financing costs (423 ) (29,634 ) Payments of debt extinguishments - (71,269 ) Proceeds from issuances of stock   5,769     28,957   Net cash used in financing activities   (39,847 )   (231,283 ) Net Change in Cash and Cash Equivalents 42,261 (297,915 ) Cash and Cash Equivalents at Beginning of Period   754,962     463,909   Cash and Cash Equivalents at End of Period $ 797,223   $ 165,994         Free Cash Flow Reconciliation (Unaudited)   Six Months Ended June 30,   2008     2007   (millions of dollars)   Operating cash flow from continuing operations $ 182 $ 24 Western states litigation and similar settlements payments - 57 Change in margin deposits, net   55     (113 ) Adjusted cash flow provided by (used in) continuing operations   237     (32 ) Capital expenditures (117 ) (99 ) Proceeds from sales of emission and exchange allowances 28 3 Purchases of emission allowances   (18 )   (14 ) Free cash flow provided by (used in) continuing operations $ 130   $ (142 )     Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007. Reliant Energy, Inc. and Subsidiaries Retail Energy Data (Unaudited)               Three Months Ended June 30, Six Months Ended June 30,   2008     2007   Change   2008     2007   Change (in millions) (in millions)   Mass gross margin $ 66 $ 201 $ (135 ) $ 187 $ 356 $ (169 ) Commercial and industrial gross margin 1 52 (51 ) 48 68 (20 ) Market usage adjustments   -     (16 )   16     (3 )   (11 )   8   Retail gross margin   67     237     (170 )   232     413     (181 )   Operation and maintenance (63 ) (60 ) (3 ) (123 ) (121 ) (2 ) Selling and marketing (38 ) (30 ) (8 ) (70 ) (60 ) (10 ) Bad debt expense   (6 )   (21 )   15     (13 )   (38 )   25   Retail contribution margin (40 ) 126 (166 ) 26 194 (168 ) Unrealized gains (losses) on energy derivatives   502     (360 )   862     1,030     256     774   Total retail energy contribution margin, including unrealized gains/losses on energy derivatives (1) $ 462   $ (234 ) $ 696   $ 1,056   $ 450   $ 606       Three Months Ended June 30, Six Months Ended June 30,   2008     2007     2008     2007   (gigawatt hours) (gigawatt hours) Electricity Sales to End-Use Retail Customers: Mass: Residential: Houston 3,523 3,542 5,832 6,187 Non-Houston 2,000 1,923 3,772 3,849 Small Business: Houston 738 756 1,321 1,471 Non-Houston   382     365     676     668   Total Mass 6,643 6,586 11,601 12,175 Commercial and Industrial: ERCOT (2) 9,752 9,052 18,525 17,062 Non-ERCOT   1,506     1,106     2,833     2,085   Total Commercial and Industrial 11,258 10,158 21,358 19,147   Market usage adjustments   5     28     (62 )   (73 ) Total   17,906     16,772     32,897     31,249       Three Months Ended June 30, Six Months Ended June 30,   2008     2007     2008     2007   (in thousands, metered locations) (in thousands, metered locations) Weighted Average Retail Customer Count: Mass: Residential: Houston 988 1,066 996 1,074 Non-Houston 541 565 545 560 Small Business: Houston 109 117 109 119 Non-Houston   39     35     38     34   Total Mass 1,677 1,783 1,688 1,787 Commercial and Industrial (2)   93     89     92     87   Total   1,770     1,872     1,780     1,874       June 30, December 31,   2008     2007   (in thousands, metered locations) Retail Customers: Mass: Residential: Houston 999 1,016 Non-Houston 549 555 Small Business: Houston 110 109 Non-Houston   39     38   Total Mass 1,697 1,718 Commercial and Industrial (2)   93     93   Total   1,790     1,811     (1) Retail energy segment profit and loss measure. (2) 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, 2007. Reliant Energy, Inc. and Subsidiaries Wholesale Energy Data (Unaudited)           Three Months Ended June 30, Six Months Ended June 30, 2008 2007 2008 2007 GWh % Economic (1)   GWh % Economic (1)   GWh % Economic (1)   GWh % Economic (1) Economic Generation (2) (3): PJM Coal 5,316.6 73 % 6,028.7 83 % 11,280.8 77 % 12,127.1 84 % MISO Coal 1,359.3 49 % 2,063.3 75 % 3,407.7 62 % 4,244.7 78 % PJM/MISO Gas 352.0 5 % 339.4 5 % 412.7 3 % 414.2 3 % West 308.6 4 % 898.9 13 % 547.0 4 % 907.3 7 % Other   7.0     1 %   1,413.3   69 %   7.0     1 %   2,750.2   67 % Total   7,343.5     29 %   10,743.6   41 %   15,655.2     31 %   20,443.5   39 %   Commercial Capacity Factor (4): PJM Coal 83.7 % 75.9 % 84.3 % 77.6 % MISO Coal 90.8 % 51.3 % 81.5 % 56.4 % PJM/MISO Gas 91.6 % 91.1 % 92.0 % 86.3 % West 94.1 % 95.1 % 86.3 % 95.2 % Other   81.4 %   91.9 %   81.4 %   91.4 % Total   85.9 %   75.4 %   84.0 %   76.0 %   Generation (3): GWh GWh GWh GWh PJM Coal 4,452.3 4,575.2 9,515.1 9,407.4 MISO Coal 1,233.9 1,058.7 2,776.1 2,395.0 PJM/MISO Gas 322.6 309.2 379.5 357.5 West 290.4 855.2 472.2 863.7 Other   5.7     1,298.7     5.7     2,512.8   Total   6,304.9     8,097.0     13,148.6     15,536.4     Open Energy Unit Margin ($/MWh) (5): PJM Coal $ 36.16 $ 32.57 $ 34.89 $ 31.68 MISO Coal 23.50 30.23 27.02 28.81 PJM/MISO Gas 46.50 29.11 52.70 27.97 West NM (6) - NM (6) NM (6) Other   -     5.39     -     5.57   Weighted average total $ 32.04   $ 24.33   $ 31.87   $ 24.91       Three Months Ended June 30, Six Months Ended June 30, 2008 2007 Change 2008 2007 Change Open energy gross margin (7): (in millions) (in millions)   PJM Coal $ 161 $ 149 $ 12 $ 332 $ 298 $ 34 MISO Coal 29 32 (3 ) 75 69 6 PJM/MISO Gas 15 9 6 20 10 10 West (3 ) - (3 ) (8 ) (4 ) (4 ) Other   -     7     (7 )   -     14     (14 ) Total 202 197 5 419 387 32   Other margin (8): PJM Coal 26 15 11 44 22 22 MISO Coal 3 3 - 5 5 - PJM/MISO Gas 33 25 8 60 36 24 West 34 36 (2 ) 56 59 (3 ) Other   10     17     (7 )   19     38     (19 ) Total   106     96     10     184     160     24     Open wholesale gross margin   308     293     15     603     547     56     Operation and maintenance (166 ) (175 ) 9 (318 ) (345 ) 27 Bad debt expense - - - (1 ) 1 (2 )             Open wholesale contribution margin   142     118     24     284     203     81     Historical and operational wholesale hedges Power (17 ) (55 ) 38 (35 ) (111 ) 76 Fuel 87 5 82 132 10 122 Tolling/Other   (1 )   20     (21 )   17     38     (21 ) Total historical and operational wholesale hedges 69 (30 ) 99 114 (63 ) 177   Unrealized gains (losses) on energy derivatives   68     34     34     98     (60 )   158     Total wholesale energy contribution margin, including historical and operational wholesale hedges and unrealized gains/losses on energy derivatives (9) $ 279   $ 122   $ 157   $ 496   $ 80   $ 416         (1) Represents economic generation (hours) divided by maximum generation hours (maximum plant capacity multiplied by 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) Excludes generation related to power purchase agreements, including tolling agreements. (4) Generation divided by economic generation. (5) Represents open energy gross margin divided by generation. (6) NM is not meaningful. (7) 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, our historical and operational wholesale hedges and unrealized gains/losses on energy derivatives. (8) Other margin represents power purchase agreements, capacity payments, ancillary services revenues and selective commercial hedge strategies. (9) 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, 2007. Reliant Energy, Inc. and Subsidiaries PJM Coal and MISO Coal (Unaudited)                   Capacity Heat Rate Q2 economic generation (GWh) Q2 commercial capacity factor Q2 generation (GWh) Unit Name (1) (MW) (MMBtu/MWh) 2008 2007 2008 2007 2008 2007   Cheswick 580 10.0 599.5 966.1 97.1% 53.0% 582.3 512.2 Conemaugh (2) 280 9.4 576.2 590.8 83.5% 74.7% 481.1 441.4 Elrama 460 11.3 368.2 764.4 82.9% 61.4% 305.3 469.2 Keystone (2) 282 9.5 595.0 595.7 99.9% 95.1% 594.4 566.5 Portland 401 9.8 686.4 676.7 52.5% 66.2% 360.2 447.7 Seward 521 9.6 1,078.8 1,052.8 89.8% 82.6% 968.6 870.1 Shawville (2) 597 10.3 1,039.1 1,009.6 84.7% 91.3% 880.2 921.5 Titus 243 10.8 373.4 372.6 75.0% 93.0% 280.2 346.6 PJM Coal Total 3,364 5,316.6 6,028.7 83.7% 75.9% 4,452.3 4,575.2       Capacity Heat Rate Q2 economic generation (GWh) Q2 commercial capacity factor Q2 generation (GWh) Unit Name (1) (MW) (MMBtu/MWh) 2008 2007 2008 2007 2008 2007   Avon Lake 721 9.3 781.6 1,197.7 98.6% 38.1% 770.6 456.2 New Castle 328 10.6 307.9 491.5 81.3% 53.9% 250.3 264.7 Niles 216 10.5 269.8 374.1 78.9% 90.3% 213.0 337.8 MISO Coal Total 1,265 1,359.3 2,063.3 90.8% 51.3% 1,233.9 1,058.7       Capacity Heat Rate Q2 YTD economic generation (GWh) Q2 YTD commercial capacity factor Q2 YTD generation (GWh) Unit Name (1) (MW) (MMBtu/MWh) 2008 2007 2008 2007 2008 2007   Cheswick 580 10.0 1,440.5 1,884.1 93.4% 72.1% 1,345.0 1,358.5 Conemaugh (2) 280 9.4 1,176.0 1,186.5 88.8% 83.6% 1,043.9 992.3 Elrama 460 11.3 1,066.3 1,611.9 82.5% 66.9% 880.1 1,079.0 Keystone (2) 282 9.5 1,204.2 1,182.5 98.4% 81.4% 1,184.9 962.3 Portland 401 9.8 1,403.7 1,356.5 70.6% 72.8% 991.2 987.5 Seward 521 9.6 2,163.6 2,118.9 78.5% 68.0% 1,697.4 1,440.9 Shawville (2) 597 10.3 2,092.4 2,054.5 83.9% 92.9% 1,756.5 1,909.2 Titus 243 10.8 734.1 732.2 83.9% 92.6% 616.1 677.7 PJM Coal Total 3,364 11,280.8 12,127.1 84.3% 77.6% 9,515.1 9,407.4       Capacity Heat Rate Q2 YTD economic generation (GWh) Q2 YTD commercial capacity factor Q2 YTD generation (GWh) Unit Name (1) (MW) (MMBtu/MWh)   2008 2007 2008 2007 2008 2007   Avon Lake 721 9.3 1,944.3 2,502.2 79.5% 43.0% 1,546.0 1,075.9 New Castle 328 10.6 803.4 999.2 86.4% 66.0% 694.0 659.6 Niles 216 10.5 660.0 743.3 81.2% 88.7% 536.1 659.5 MISO Coal Total 1,265 3,407.7 4,244.7 81.5% 56.4% 2,776.1 2,395.0     (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, 2007. Reliant Energy, Inc. and Subsidiaries PJM/MISO Gas (Unaudited)                   Capacity Heat Rate Q2 economic generation (GWh) Q2 commercial capacity factor Q2 generation (GWh) Unit Name (1) (MW) (MMBtu/MWh)   2008 2007 2008 2007 2008 2007   Aurora (2) 878 10.5 7.3 11.9 100.0 % 69.7 % 7.3 8.3 Blossburg 19 14.6 0.7 0.8 100.0 % 100.0 % 0.7 0.8 Brunot Island 289 10.4 1.3 2.9 100.0 % 100.0 % 1.3 2.9 Gilbert 536 11.0 14.5 10.8 100.0 % 53.7 % 14.5 5.8 Glen Gardner 160 14.6 2.2 2.0 86.4 % 100.0 % 1.9 2.0 Hamilton 20 14.8 0.1 1.7 100.0 % 100.0 % 0.1 1.7 Hunterstown 60 14.8 1.0 5.2 100.0 % 98.1 % 1.0 5.1 Hunterstown CCGT 810 7.0 299.5 258.6 93.3 % 94.0 % 279.4 243.0 Mountain 40 14.3 1.5 4.3 100.0 % 100.0 % 1.5 4.3 Orrtanna 20 14.4 - 2.5 0.0 % 100.0 % - 2.5 Portland 169 11.2 3.9 3.6 100.0 % 100.0 % 3.9 3.6 Sayreville 224 13.8 13.2 4.7 41.7 % 17.0 % 5.5 0.8 Shawnee 20 14.0 0.1 - 100.0 % 0.0 % 0.1 - Shawville 5-7 (3) 6 10.2 - - 0.0 % 0.0 % - - Titus 31 17.4 - - 0.0 % 0.0 % - - Tolna 40 14.2 0.7 3.2 100.0 % 100.0 % 0.7 3.2 Warren 68 12.8 - - 0.0 % 0.0 % - - Werner 212 13.8 4.1 8.9 70.7 % 87.6 % 2.9 7.8 Shelby 356 9.8 1.9 18.3 94.7 % 95.1 % 1.8 17.4 PJM/MISO Gas Total 3,958 352.0 339.4 91.6 % 91.1 % 322.6 309.2       Capacity Heat Rate Q2 YTD economic generation (GWh) Q2 YTD commercial capacity factor   Q2 YTD generation (GWh) Unit Name (1) (MW) (MMBtu/MWh)   2008 2007 2008 2007 2008 2007   Aurora (2) 878 10.5 11.3 15.6 100.0 % 53.2 % 11.3 8.3 Blossburg 19 14.6 7.2 4.0 91.7 % 100.0 % 6.6 4.0 Brunot Island 289 10.4 1.3 3.7 100.0 % 100.0 % 1.3 3.7 Gilbert 536 11.0 18.7 26.6 100.0 % 71.1 % 18.7 18.9 Glen Gardner 160 14.6 2.5 2.2 84.0 % 100.0 % 2.1 2.2 Hamilton 20 14.8 0.3 1.7 100.0 % 100.0 % 0.3 1.7 Hunterstown 60 14.8 1.5 5.2 100.0 % 98.1 % 1.5 5.1 Hunterstown CCGT 810 7.0 307.2 302.8 93.5 % 88.4 % 287.1 267.7 Mountain 40 14.3 3.7 5.5 100.0 % 100.0 % 3.7 5.5 Orrtanna 20 14.4 0.3 3.0 100.0 % 100.0 % 0.3 3.0 Portland 169 11.2 9.3 6.8 100.0 % 100.0 % 9.3 6.8 Sayreville 224 13.8 38.8 5.3 72.4 % 15.1 % 28.1 0.8 Shawnee 20 14.0 0.1 0.1 100.0 % 100.0 % 0.1 0.1 Shawville 5-7 (3) 6 10.2 - - 0.0 % 0.0 % - - Titus 31 17.4 - - 0.0 % 0.0 % - - Tolna 40 14.2 1.0 4.0 100.0 % 100.0 % 1.0 4.0 Warren 68 12.8 - - 0.0 % 0.0 % - - Werner 212 13.8 7.6 9.4 82.9 % 88.3 % 6.3 8.3 Shelby 356 9.8 1.9 18.3 94.7 % 95.1 % 1.8 17.4 PJM/MISO Gas Total 3,958 412.7 414.2 92.0 % 86.3 % 379.5 357.5     (1) Unless otherwise indicated, the Company owns a 100% interest in each facility listed. (2) Excludes generation 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, 2007. Reliant Energy, Inc. and Subsidiaries West and Other (Unaudited)                   Capacity Heat Rate Q2 economic generation (GWh) Q2 commercial capacity factor Q2 generation (GWh) Unit Name (1) (MW) (MMBtu/ MWh)   2008 2007 2008 2007 2008 2007   Bighorn 598 7.2 0.5 517.0 100.0% 100.0% 0.5 517.0 Coolwater 622 10.1 80.2 136.6 89.7% 96.3% 71.9 131.6 Ellwood (2) 54 13.3 - - 0.0% 0.0% - - Etiwanda (2) 640 10.0 - - 0.0% 0.0% - - Mandalay (2) 560 10.9 101.1 111.7 90.8% 99.4% 91.8 111.0 Ormond Beach 1,516 9.6 126.8 133.6 99.5% 71.6% 126.2 95.6 West Total 3,990 308.6 898.9 94.1% 95.1% 290.4 855.2       Capacity Heat Rate Q2 economic generation (GWh) Q2 commercial capacity factor Q2 generation (GWh) Unit Name (1) (MW) (MMBtu/ MWh)   2008 2007 2008 2007 2008 2007   Channelview (3) 830 6.1 - 1,398.4 0.0% 91.8% - 1,283.8 Choctaw 800 7.0 4.1 13.9 68.3% 100.0% 2.8 13.9 Indian River (2) 587 10.5 - - 0.0% 0.0% - - Osceola (2) 470 11.0 2.9 1.0 100.0% 100.0% 2.9 1.0 Other Total 2,687 7.0 1,413.3 81.4% 91.9% 5.7 1,298.7       Capacity Heat Rate Q2 YTD economic generation (GWh) Q2 YTD commercial capacity factor   Q2 YTD generation (GWh) Unit Name (1) (MW) (MMBtu/ MWh)   2008 2007 2008 2007 2008 2007   Bighorn 598 7.2 0.5 517.0 100.0% 100.0% 0.5 517.0 Coolwater 622 10.1 174.3 136.6 84.6% 96.3% 147.4 131.6 Ellwood (2) 54 13.3 - - 0.0% 0.0% - - Etiwanda (2) 640 10.0 - - 0.0% 0.0% - - Mandalay (2) 560 10.9 161.7 120.1 94.2% 99.5% 152.4 119.5 Ormond Beach 1,516 9.6 210.5 133.6 81.7% 71.6% 171.9 95.6 West Total 3,990 547.0 907.3 86.3% 95.2% 472.2 863.7       Capacity Heat Rate Q2 YTD economic generation (GWh) Q2 YTD commercial capacity factor   Q2 YTD generation (GWh) Unit Name (1) (MW) (MMBtu/ MWh)   2008 2007 2008 2007 2008 2007   Channelview (3) 830 6.1 - 2,735.3 0.0% 91.3% - 2,497.9 Choctaw 800 7.0 4.1 13.9 68.3% 100.0% 2.8 13.9 Indian River (2) 587 10.5 - - 0.0% 0.0% - - Osceola (2) 470 11.0 2.9 1.0 100.0% 100.0% 2.9 1.0 Other Total 2,687 7.0 2,750.2 81.4% 91.4% 5.7 2,512.8     (1) Unless otherwise indicated, the Company owns a 100% interest in each facility listed. (2) Excludes generation during periods the unit operated under power purchase agreements. (3) Channelview was deconsolidated on August 20, 2007 and the Channelview plant sold on July 1, 2008.     Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007. Reliant Energy, Inc. and Subsidiaries Capital Expenditures Forecast (Unaudited)         2008E 2009E 2010E (in millions) Maintenance capital expenditures: Retail energy $ 24 $ 14 $ 14 Wholesale energy 47 53 44 Other operations   16   16   16 87 83 74 Environmental (1) 233 109 21 Capitalized interest   18   30   2 Total capital expenditures $ 338 $ 222 $ 97   (1) Estimate represents the low end of the range.     Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007. Reliant Energy, Inc. and Subsidiaries Gross Debt (Unaudited)     June 30, 2008 (in millions) Debt: Senior secured revolver $ - Senior secured notes 667 Senior unsecured notes 1,313 Convertible senior subordinated notes - Orion Power 12% notes (1) 422 PEDFA fixed-rate bonds for Seward plant 500 Channelview (2) - Retail working capital facility - Warrants (1 ) Other (3)   1   Total GAAP debt 2,902   REMA operating leases (off-balance sheet)   461   Gross Debt (4) $ 3,363       (1) Orion 12% notes include purchase accounting adjustments of $25 million. (2) Channelview was deconsolidated on August 20, 2007 and the Channelview plant sold on July 1, 2008. (3) Other subsidiary debt. (4) Gross debt includes off-balance sheet REMA leases of $461 million.     Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007.     FOR ADDITIONAL INQUIRIES PLEASE CONTACT:   Dennis Barber (713) 497-3042