Reliant Resources is mulling whether to mothball certain power plants in its U.S. fleet that are losing money, and a top official with the company said that announcements related to such a move are likely to occur in the near future.

“We believe there are units that are cash-on-cash losing money and we’re evaluating today whether those units should be mothballed,” said Reliant CEO Joel Staff last week in a conference call with investors following the company’s release of second quarter 2003 earnings results.

“Obviously, mothballing does in itself incur some additional expense, so we’re looking at the forward market projections to determine whether some of that capacity should be mothballed,” Staff said in response to an analyst’s question. “You should expect us to be making some pronouncements on that fairly soon with respect to mothballing units.”

In his prepared remarks, Staff said that during the 2003 second quarter, the company’s baseload coal plants “benefited significantly” from higher natural gas prices. “On the other hand, the peaking gas plants suffered significantly from the low demand,” Staff said in reviewing Reliant’s wholesale segment performance.

Reliant Resources on Tuesday reported a loss from continuing operations of $28 million, or $0.09 per share, for the second quarter of 2003, compared to income from continuing operations of $122 million, or $0.42 per share, for the same period of 2002.

“All of the ’03 decline is in our wholesale business,” Staff said. “We estimate that about 25%, or around $50 million, of the decline is a result of milder-than-normal weather in the Northeast,” he said. “I think this is representative of the volatility that’s inherent in a business that is significantly impacted by variables such as weather and commodity prices.”

In its latest quarterly report filed at the Securities and Exchange Commission on Wednesday, Reliant said that its wholesale energy segment’s power generation margins decreased $21 million during the most recent second quarter compared to the same period in 2002.

Reliant said that power generation margins were negatively impacted due to a $39 million decrease in power generation margins in the Mid-Atlantic region. In that part of the country, Reliant has faced lower capacity revenues as a result of the expiration of a large capacity contract in May 2002, as well as a decrease in volumes generated resulting from milder temperatures during the second quarter of 2003. Also, Reliant said that it was grappling with decreased margins associated with hedge ineffectiveness.

In addition, the company’s power generation margins were hurt by a $26 million net decrease in margins in the New York region due to decreased volumes generated resulting from milder temperatures, which was partially offset by an increase in prices for power generation.

Reliant on Tuesday said that Staff had been named chairman and CEO. He has held both posts on an interim basis since the resignation of Steve Letbetter in April. Prior to Reliant Resources, Staff had been chairman, president and CEO of National Oilwell Inc.

Meanwhile, Reliant said in the quarterly report that on July 24, the U.S. Attorney for the Northern District of California sent the company subpoenas for testimony from a number of Reliant’s current employees.

However, it’s not clear from the 10Q and comments from a Reliant spokesperson that the July 24 subpoena specifically relates to energy trading matters.

“I don’t have any elaboration, other than what’s in the 10Q, other than to tell you that we’re continuing to cooperate with investigations and inquiries initiated by the FERC, the U.S. attorney and other agencies,” Reliant spokesperson Richard Wheatley told NGI.

The company noted in the filing that it has handed over information to both offices of the U. S. Attorney. Reliant also noted that it has not received any additional requests for information or interviews from the U.S. Attorney for the Southern District of New York since the fall of 2002. “We are cooperating with both offices of the United States Attorney,” Reliant said in the filing

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