Natural gas prices, basis differential movements, and Electric Reliability Council of Texas (ERCOT) market fundamentals have the highest potential to erode wholesale margins and NRG Energy Inc.'s credit profile. Power markets are being influenced adversely by slowing demand due to milder weather and a secular decline from growing energy efficiency and renewable penetration. However, for NRG, the Texas and Louisiana markets are still growing. Apart from forward hedges, a high percentage of cash flow now accrues from counter and non-cyclical gas exposed businesses (i.e retail, capacity, and long-term contracted margins). The company has embarked on debt reduction to counter the commodity downturn. Over the past 15 months, NRG has reduced about $1.1 billion of recourse debt to about $7.9 billion.
