A substantially hedged baseload fleet for the next few years provides positive free cash flow. Hedges position NRG Energy Inc. well to ride out the current merchant downturn. Significant de-leveraging is expected, through the mandatory 50% cash sweep. Texas retail business has performed well and mitigates gas price exposure. The generation fleet has a strong and improving operating record. Positive free cash flow and adequate financial ratios are expected for the next few years, even under our low gas price assumptions. Liquidity is strong. Longer-term cash flow exposure to U.S. merchant power market risks; Much more uncertain prospects for tightening reserve margins; Operational and counterparty credit risks that arise from a highly hedged fleet; A relatively leveraged balance sheet that
