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NRG Energy Back in Black for '04, Fourth Quarter

Now more than a year out of Chapter 11 bankruptcy, what its CEO called "the new NRG Energy" Wednesday reported it was profitable in the fourth quarter and all of 2004 ($18.1 million, or 18 cents/diluted share for the fourth quarter, and $185.6 million, or $1.85/diluted share overall in '04), including a $60 million mark-to-market gain associated with "financial electricity sales executed during the fourth quarter."

What NRG called "record operating reliability" across its fleet of merchant generation plants in four regions of the country and reduced debt played key roles in the 2004 results, the company said.

In the Northeast and other regions where it has merchant power plants, NRG was able to take advantage of high energy prices at the end of last year, according to CEO David Crane, who noted that a key to last year's results and the company's future is what he called a "comprehensive coal strategy," involving extending the productive life of its baseload coal-fired power plants and extending the marketing and hedging of their future output.

In response to questions from analysts, Crane emphasized that NRG is not expecting big things from its California plants this year, but is "more bullish" for 2006 and beyond because of the California Public Utilities Commission's new resource adequacy requirements taking effect in June next year. The CEO also reiterated that NRG and its partner Dynegy are in total agreement on the future of the West Coast plants.

Crane said NRG was able to exceed its financial objectives through "strong execution across all areas of our business" in 2004, and that having a successful first full calendar year out of bankruptcy has established a financial/balance sheet "platform" to push for what he called "value-enhancing growth."

NRG also won permitting for its proposed upgrade of its El Segundo natural gas power plant in Southern California which it owns and operates jointly with Dynegy, and which will require a long-term power purchase contract before the construction of the expansion begins. In addition, the company is "close to gaining a permit" to build a proposed fourth coal-fired unit at its Big Cajun power plant in Louisiana, which Crane said would be expected to be ready for development early next year, although the cost estimates are still being worked out. When pressed, Crane said the added unit would be "extremely expensive" (between $1,500 and 2,000/kW) on a hard and soft cost basis for a "super critical coal-fired plant with all the best-available technology."

Other highlights emphasized by the company are:

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