Reliant Energy Reports Fourth Quarter Results

HOUSTON, Feb. 21 /PRNewswire-FirstCall/ -- Reliant Energy, Inc. reported a loss from continuing operations before income taxes of $255 million for the fourth quarter of 2005, compared to $324 million for the same period of 2004. The reported numbers include net losses from unrealized energy derivatives of $86 million and $138 million, respectively for 2005 and 2004. Loss from continuing operations before income taxes was $668 million for the twelve months ended December 31, 2005, compared to $392 million for the same period of 2004. The reported numbers include net losses from unrealized energy derivatives of $177 million and $224 million, respectively for 2005 and 2004.

"Since our third-quarter call, we have undertaken an in-depth review of our strategy and have identified several elements that are critical to unlocking the value of the company," said Joel Staff, chairman and chief executive officer. "Our priorities for 2006 will include completing the transition to a fully competitive retail market in Texas, converting to an open model in our wholesale business, improving the commercial capacity factor of our generating plants and managing our collateral exposure to reduce postings by $1 billion by year end. These measures, combined with recent commodity prices, are expected to yield more than $1 billion in annual open EBITDA."

Open EBITDA (earnings before interest, income taxes, depreciation and amortization) was $200 million for the fourth quarter of 2005, compared to $50 million for the fourth quarter of 2004. The company believes that open EBITDA provides a meaningful representation of the earnings power of the company as it excludes the impact of historical wholesale hedging activity, gains on the sales of emission allowances, gains or losses on the sales of assets and gains or losses on the sales of equity method investments. The increase was primarily related to improvements in wholesale unit margins and increased economic hours, partially offset by lower retail gross margin and a reduction in the commercial capacity factor for the wholesale generation assets.

Adjusted EBITDA was $47 million for the fourth quarter of 2005, compared to $95 million for the fourth quarter of 2004. The reduction was primarily related to lower gross margin, partially offset by net gains from the sales of emission allowances and lower expenses. Adjusted EBITDA for the year ended December 31, 2005 was $697 million compared to $719 million for the same period of 2004. The reduction was primarily related to lower retail gross margin, partially offset by net gains from the sales of emission allowances and lower expenses.

During the year ended December 31, 2005, the company reported a $1,110 million use of cash in continuing operations from operating activities, compared to cash provided in continuing operations of $5 million in 2004. The reported numbers include increases in cash margin deposits totaling $1,214 million in 2005 and $451 million for 2004. Free cash flow from continuing operations for the year ended December 31, 2005 was $22 million, compared to $274 million in 2004. The decrease in free cash flow was primarily related to lower gross margin and changes in working capital.

Open EBITDA Outlook Reconciliation ($ millions) 2006 2007 2008 Income (loss) from continuing operations before income taxes (a) ($62) $136 $186 Delivery of product underlying the unrealized (gains) losses on energy derivatives (126) (27) 1 Depreciation and amortization 378 466 579 Interest expense, net 380 317 283 Adjusted EBITDA (a) $570 $892 $1,049 Historical wholesale hedges (b) 643 250 108 Gains on sales of emission allowances (a),(c) (122) -- -- Open EBITDA (a) $1,091 $1,142 $1,157 (a) Certain factors that could affect GAAP financial measures are not accessible on a forward-looking basis, but could be material to future reported earnings. (b) Historical wholesale hedges excluded from Open EBITDA are primarily related to closed and remaining power hedges, fuel hedges, long-term tolling purchases and gas transportation and are calculated using forward commodity prices as of December 29, 2005. (c) Sales as of February 2, 2006. Adjusted EBITDA Reconciliation Three Months Ended Twelve Months December 31, Ended December 31, ($ millions) 2005 2004 2005 2004 Loss from continuing operations before income taxes ($255) ($324) ($668) ($392) Depreciation and amortization 110 104 446 453 Interest expense, net 98 144 376 383 EBITDA (47) (76) 154 444 Changes in California- related receivables and reserves --- 33 (1) 11 Western states and Cornerstone settlements 8 --- 359 --- Unrealized losses on energy derivatives (a) 86 138 177 224 Settlement of shareholder class action lawsuits --- --- 8 --- October 2003 FERC settlement --- --- --- 12 Gain on sale of counterparty claim --- --- --- (30) Gain on sale of ICE --- (9) --- (9) Gains recorded prior to 2003 that were realized/ collected (EITF No. 02-03) --- 5 --- 21 2004 accrual for payment to CenterPoint Energy, Inc. --- --- --- 2 2004 severance and restructuring costs --- 4 --- 44 Adjusted EBITDA $47 $95 $697 $719 (a) Reliant Energy's hedging activities include buying power supply for its retail business, selling the output of and buying fuel for its power plants, as well as winding down legacy trading positions and optimization of gas transport and storage positions. Some of these hedging transactions use mark-to-market accounting, which requires the company to record gains/losses related to future periods based on current changes in forward commodity prices. The company refers to these gains and losses prior to settlement, as well as ineffectiveness on cash flow hedges as "unrealized gains/losses on energy derivatives." In some cases, the related underlying transactions being hedged receive accrual accounting treatment, resulting in a mismatch of accounting treatments. Free Cash Flow Reconciliation Twelve Months Ended December 31, ($ millions) 2005 2004 Operating cash flow from continuing operations ($1,110) $5 Accounts receivable factoring --- (232) Payment to CenterPoint Energy --- 177 Change in margin deposits (a) 1,214 451 2004 cash severance costs --- 33 Capital expenditures (82) (160) Free cash flow from continuing operations $22 $274 (a) Reliant Energy posts collateral to support most commodity sales and purchase transactions. The collateral provides assurance to counterparties that contractual obligations will be fulfilled. As the obligations are fulfilled, the collateral is returned. Reliant Energy commonly uses both cash and letters of credit as collateral. The use of cash as collateral appears as an asset on the balance sheet and as a use of cash in operating cash flow. When cash collateral is returned, the asset is eliminated from the balance sheet and it appears as a source of cash in operating cash flow. Changes in margin deposits reflect the net inflows and outflows of cash collateral and are driven by hedging levels and changes in commodity prices, not by the cash flow generated by the business related to sales and purchases in the reporting period. NON-GAAP FINANCIAL MEASURES

This press release and the attached financial tables include the following non-GAAP financial measures:

Contribution margin Adjusted contribution margin Adjusted gross margin Free cash flow Open wholesale gross margin EBITDA Adjusted EBITDA Open EBITDA

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 filed along with this press release.

WEBCAST OF EARNINGS CONFERENCE CALL

Reliant Energy has scheduled its fourth-quarter 2005 earnings conference call for Tuesday, February 21, 2006, at 10:00 a.m., Central time. Interested parties may listen to a live audio broadcast of the conference call at http://www.reliant.com/corporate. 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 available at this Website address.

Reliant Energy, Inc. based in Houston, Texas, provides electricity and energy services to retail and wholesale customers in the United States. In Texas, the company provides service to approximately 1.9 million retail electricity customers, including residential and small business customers and large commercial, industrial, governmental and institutional customers. Reliant also serves commercial, industrial, governmental and institutional customers in the PJM (Pennsylvania, New Jersey and Maryland) market.

The company is one of the largest independent power producers in the nation with approximately 16,000 megawatts of power generation capacity from continuing operations across the United States. These strategically located generating assets utilize natural gas, fuel oil and coal. For more information, visit http://www.reliant.com/corporate.

This news release contains "forward-looking statements." Forward-looking statements are statements that contain projections, estimates or assumptions about our revenues, income and other financial items, our plans for the future, future economic performance, transactions and dispositions and financings related thereto. Forward-looking statements relate to future events and anticipated revenues, earnings, business strategies, competitive position or other aspects of our operations or operating results. 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.

We have based our forward-looking statements on management's beliefs and assumptions based on information available to management at the time the statements are made. Actual results may differ materially from those expressed or implied by forward-looking statements as a result of many factors or events, including legislative and regulatory 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, changes in our business plan and other factors we discuss in our filings 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.

Information in this release is subject to adjustment resulting from further review and the obtaining of additional information that impacts the consolidated financial statements.

Reliant Energy, Inc. and Subsidiaries Consolidated Statements of Operations (Thousands of Dollars, except per share amounts) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 Revenues: Revenues (including $123,768, $(16,455), $(203,081) and $(32,007) unrealized gains (losses)) $2,615,265 $1,953,826 $9,726,995 $8,098,222 Expenses: Purchased power, fuel and cost of gas sold (including $(209,637), $(121,550), $25,846 and $(192,395) unrealized gains (losses)) 2,477,475 1,772,244 8,354,921 6,564,137 Operation and maintenance 180,849 194,900 736,954 782,462 Selling and marketing 28,930 20,041 95,256 81,741 Bad debt expense 14,181 8,703 58,008 45,707 Total 2,701,435 1,995,888 9,245,139 7,474,047 Contribution Margin (86,170) (42,062) 481,856 624,175 Other general and administrative 7,393 47,049 139,222 198,723 Western states and Cornerstone settlements 8,631 - 359,436 - Loss on sales of receivables - - - 33,741 Accrual for payment to CenterPoint Energy, Inc. - - - 1,600 Gain on sale of counterparty claim - - - (30,000) Gains on sales of assets and emission allowances, net (52,322) (4,954) (168,114) (19,834) Depreciation and amortization 109,341 104,512 445,871 453,042 Total 73,043 146,607 776,415 637,272 Operating Loss (159,213) (188,669) (294,559) (13,097) Other Income (Expense): Income (loss) of equity investments, net 2,273 (234) 25,458 (9,478) Other, net 146 9,021 (22,672) 13,455 Loss Before Interest and Taxes (156,794) (179,882) (291,773) (9,120) Interest expense (105,601) (149,970) (399,281) (417,514) Interest income 7,947 5,952 23,227 34,960 Loss from Continuing Operations Before Income Taxes (254,448) (323,900) (667,827) (391,674) Income tax benefit (47,851) (110,914) (203,080) (115,214) Loss from Continuing Operations (206,597) (212,986) (464,747) (276,460) Income (loss) from discontinued operations 49,145 (51,372) 110,799 239,800 Loss Before Cumulative Effect of Accounting Changes (157,452) (264,358) (353,948) (36,660) Cumulative effect of accounting changes, net of tax (608) - (608) 7,290 Net Loss $(158,060) $(264,358) $(354,556) $(29,370) Basic and Diluted Earnings (Loss) Per Share: Loss from continuing operations $(0.68) $(0.71) $(1.54) $(0.93) Income (loss) from discontinued operations 0.16 (0.17) 0.37 0.81 Cumulative effect of accounting changes, net of tax - - - 0.02 Net Loss $(0.52) $(0.88) $(1.17) $(0.10) Weighted Average Common Shares Outstanding (in thousands): - Basic 304,849 298,979 302,409 297,527 - Diluted 304,849 298,979 302,409 297,527 Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Results of Operations by Segment - As Reported (Millions of Dollars) (Unaudited) Three Months Ended December 31, December 31, 2005 2004 Change Retail Energy: Revenues: Revenues $1,736 $1,466 $270 Operating Expenses: Purchased power, fuel and cost of gas sold 1,781 1,418 363 Gross margin (45) 48 (93) Operation and maintenance 48 50 (2) Selling and marketing 29 20 9 Bad debt expense 14 8 6 Contribution margin - Retail Energy (136) (30) (106) Wholesale Energy: Revenues: Revenues 1,059 584 475 Operating Expenses: Purchased power, fuel and cost of gas sold 878 450 428 Gross margin 181 134 47 Operation and maintenance 132 145 (13) Bad debt expense - 1 (1) Contribution margin - Wholesale Energy 49 (12) 61 Other Operations: Revenues: Revenues 2 - 2 Gross margin 2 - 2 Operation and maintenance 1 - 1 Contribution margin - Other Operations 1 - 1 Eliminations: Revenues: Revenues (182) (96) (86) Operating Expenses: Purchased power, fuel and cost of gas sold (182) (96) (86) Gross margin - - - Consolidated: Revenues: Revenues 2,615 1,954 661 Operating Expenses: Purchased power, fuel and cost of gas sold 2,477 1,772 705 Gross margin 138 182 (44) Operation and maintenance 181 195 (14) Selling and marketing 29 20 9 Bad debt expense 14 9 5 Contribution margin - Consolidated (86) (42) (44) Other general and administrative 8 48 (40) Western states and Cornerstone settlements 8 - 8 Gains on sales of assets and emission allowances, net (52) (5) (47) Depreciation and amortization 110 104 6 Total 74 147 (73) Operating Loss (160) (189) 29 Income of equity investments, net 3 - 3 Other, net - 9 (9) Loss before interest and income taxes (157) (180) 23 Interest expense (106) (150) 44 Interest income 8 6 2 Loss from continuing operations before income taxes (255) (324) 69 Income tax benefit (48) (111) 63 Loss from continuing operations (207) (213) 6 Income (loss) from discontinued operations 49 (51) 100 Cumulative effect of accounting change, net of tax (1) - (1) Net Loss $(159) $(264) $105 Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Results of Operations by Segment - As Reported (Millions of Dollars) (Unaudited) Twelve Months Ended December 31, December 31, 2005 2004 Change Retail Energy: Revenues: Revenues $7,045 $6,064 $981 Operating Expenses: Purchased power, fuel and cost of gas sold 6,351 5,335 1,016 Gross margin 694 729 (35) Operation and maintenance 190 222 (32) Selling and marketing 95 82 13 Bad debt expense 56 48 8 Contribution margin - Retail Energy 353 377 (24) Wholesale Energy: Revenues: Revenues 3,301 2,374 927 Operating Expenses: Purchased power, fuel and cost of gas sold 2,630 1,569 1,061 Gross margin 671 805 (134) Operation and maintenance 544 560 (16) Bad debt expense 2 (2) 4 Contribution margin - Wholesale Energy 125 247 (122) Other Operations: Revenues: Revenues 6 - 6 Operating Expenses: Purchased power, fuel and cost of gas sold (1) - (1) Gross margin 7 - 7 Operation and maintenance 3 - 3 Contribution margin - Other Operations 4 - 4 Eliminations: Revenues: Revenues (625) (340) (285) Operating Expenses: Purchased power, fuel and cost of gas sold (625) (340) (285) Gross margin - - - Consolidated: Revenues: Revenues 9,727 8,098 1,629 Operating Expenses: Purchased power, fuel and cost of gas sold 8,355 6,564 1,791 Gross margin 1,372 1,534 (162) Operation and maintenance 737 782 (45) Selling and marketing 95 82 13 Bad debt expense 58 46 12 Contribution margin - Consolidated 482 624 (142) Other general and administrative 140 198 (58) Western states and Cornerstone settlements 359 - 359 Loss on sales of receivables - 34 (34) Accrual for payment to CenterPoint Energy, Inc. - 2 (2) Gain on sale of counterparty claim - (30) 30 Gains on sales of assets and emission allowances, net (168) (20) (148) Depreciation and amortization 446 453 (7) Total 777 637 140 Operating Loss (295) (13) (282) Income (loss) of equity investments, net 26 (9) 35 Other, net (23) 13 (36) Loss before interest and income taxes (292) (9) (283) Interest expense (399) (418) 19 Interest income 23 35 (12) Loss from continuing operations before income taxes (668) (392) (276) Income tax benefit (203) (116) (87) Loss from continuing operations (465) (276) (189) Income from discontinued operations 111 240 (129) Cumulative effect of accounting changes, net of tax (1) 7 (8) Net Loss $(355) $(29) $(326) Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Results of Operations by Segment - Adjusted (Millions of Dollars) (Unaudited) Three Months Ended December 31, December 31, 2005 2004 Change Retail Energy: Revenues: Revenues $1,736 $1,471 $265 Operating Expenses: Purchased power, fuel and cost of gas sold 1,631 1,289 342 Gross margin 105 182 (77) Operation and maintenance 48 49 (1) Selling and marketing 29 20 9 Bad debt expense 14 8 6 Contribution margin - Retail Energy 14 105 (91) Wholesale Energy: Revenues: Revenues 936 634 302 Operating Expenses: Purchased power, fuel and cost of gas sold 819 458 361 Gross margin 117 176 (59) Operation and maintenance 132 145 (13) Bad debt expense - 1 (1) Contribution margin - Wholesale Energy (15) 30 (45) Other Operations: Revenues: Revenues 2 - 2 Operating Expenses: Purchased power, fuel and cost of gas sold - - - Gross margin 2 - 2 Operation and maintenance 1 - 1 Contribution margin - Other Operations 1 - 1 Eliminations: Revenues: Revenues (182) (96) (86) Operating Expenses: Purchased power, fuel and cost of gas sold (182) (96) (86) Gross margin - - - Consolidated: Revenues: Revenues 2,492 2,009 483 Operating Expenses: Purchased power, fuel and cost of gas sold 2,268 1,651 617 Gross margin 224 358 (134) Operation and maintenance 181 194 (13) Selling and marketing 29 20 9 Bad debt expense 14 9 5 Contribution margin - Consolidated - 135 (135) Other general and administrative 8 45 (37) Gains on sales of assets and emission allowances, net (52) (5) (47) Depreciation and amortization 110 104 6 Total 66 144 (78) Operating Loss (66) (9) (57) Income of equity investments, net 3 - 3 Other, net - - - Loss before interest and income taxes (63) (9) (54) Interest expense (106) (150) 44 Interest income 8 3 5 Loss from continuing operations before income taxes (161) (156) (5) Income tax benefit (12) (47) 35 Loss from continuing operations (149) (109) (40) Income (loss) from discontinued operations 49 (51) 100 Cumulative effect of accounting change, net of tax (1) - (1) Net Loss $(101) $(160) $59 Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Results of Operations by Segment - Adjusted (Millions of Dollars) (Unaudited) Twelve Months Ended December 31, December 31, 2005 2004 Change Retail Energy: Revenues: Revenues $7,045 $6,085 $960 Operating Expenses: Purchased power, fuel and cost of gas sold 6,282 5,063 1,219 Gross margin 763 1,022 (259) Operation and maintenance 190 216 (26) Selling and marketing 95 80 15 Bad debt expense 56 48 8 Contribution margin - Retail Energy 422 678 (256) Wholesale Energy: Revenues: Revenues 3,503 2,429 1,074 Operating Expenses: Purchased power, fuel and cost of gas sold 2,725 1,649 1,076 Gross margin 778 780 (2) Operation and maintenance 544 549 (5) Bad debt expense 2 (2) 4 Contribution margin - Wholesale Energy 232 233 (1) Other Operations: Revenues: Revenues 6 - 6 Operating Expenses: Purchased power, fuel and cost of gas sold (1) - (1) Gross margin 7 - 7 Operation and maintenance 3 - 3 Contribution margin - Other Operations 4 - 4 Eliminations: Revenues: Revenues (625) (340) (285) Operating Expenses: Purchased power, fuel and cost of gas sold (625) (340) (285) Gross margin - - - Consolidated: Revenues: Revenues 9,929 8,174 1,755 Operating Expenses: Purchased power, fuel and cost of gas sold 8,381 6,372 2,009 Gross margin 1,548 1,802 (254) Operation and maintenance 737 765 (28) Selling and marketing 95 80 15 Bad debt expense 58 46 12 Contribution margin - Consolidated 658 911 (253) Other general and administrative 132 173 (41) Loss on sales of receivables - 34 (34) Gains on sales of assets and emission allowances, net (168) (20) (148) Depreciation and amortization 446 425 21 Total 410 612 (202) Operating income 248 299 (51) Income (loss) of equity investments, net 26 (9) 35 Other, net (23) 4 (27) Earnings before interest and income taxes 251 294 (43) Interest expense (399) (418) 19 Interest income 17 19 (2) Loss from continuing operations before income taxes (131) (105) (26) Income tax benefit (1) (7) 6 Loss from continuing operations (130) (98) (32) Income from discontinued operations 111 240 (129) Cumulative effect of accounting changes, net of tax (1) 7 (8) Net Income (loss) $(20) $149 $(169) Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Results of Operations by Segment - Adjustments (Millions of Dollars) (Unaudited) Three Months Ended December 31, December 31, 2005 2004 Change Retail Energy: Gross Margin (1) Adjustments: Gains recorded prior to 2003 to be realized/collected in current period $- $5 $(5) Unrealized (gains)/losses on energy derivatives 150 129 21 Total gross margin adjustments 150 134 16 Operating Expenses Adjustments: Operation and maintenance adjustment - severance and restructuring - (1) 1 Total operating expenses adjustments - (1) 1 Wholesale Energy: Gross Margin (1) Adjustments: Changes in California-related receivables and reserves - 33 (33) Unrealized (gains)/losses on energy derivatives (64) 9 (73) Total gross margin adjustments (64) 42 (106) Consolidated: Selling, general and administrative adjustment - severance and restructuring - (1) 1 Selling, general and administrative adjustment - restructuring costs associated with lease on corporate headquarters - (2) 2 Western states and Cornerstone settlements (8) - (8) Interest income adjustment - California-related interest income - (3) 3 Gain on sale of non-marketable investment - ICE - 9 (9) Income tax expense - tax adjustments, net 36 64 (28) (1) Revenues less purchased power, fuel and cost of gas sold. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Results of Operations by Segment - Adjustments (Millions of Dollars) (Unaudited) Twelve Months Ended December 31, December 31, 2005 2004 Change Retail Energy: Gross Margin (1) Adjustments: Gains recorded prior to 2003 to be realized/collected in current period $- $21 $(21) Unrealized losses on energy derivatives 69 272 (203) Total gross margin adjustments 69 293 (224) Operating Expenses Adjustments: Operation and maintenance adjustment - severance and restructuring - (6) 6 Selling and marketing adjustment - severance and restructuring - (2) 2 Total operating expenses adjustments - (8) 8 Wholesale Energy: Gross Margin (1) Adjustments: Changes in California-related receivables and reserves (1) 11 (12) Adjustment to October 2003 FERC settlement - 12 (12) Unrealized (gains)/losses on energy derivatives 108 (48) 156 Total gross margin adjustments 107 (25) 132 Operating Expenses Adjustments: Operation and maintenance adjustment - severance and restructuring - (11) 11 Consolidated: Selling, general and administrative adjustment - severance and restructuring - (12) 12 Selling, general and administrative adjustment - settlement of shareholder class action lawsuits (8) - (8) Selling, general and administrative adjustment - restructuring costs associated with lease on corporate headquarters - (13) 13 Western states and Cornerstone settlements (359) - (359) Accrual for payment to CenterPoint Energy, Inc. adjustment - (2) 2 Gain on sale of counterparty claim - 30 (30) Depreciation and amortization adjustment - accelerated depreciation on retired generation assets - (12) 12 Depreciation and amortization adjustment - equipment impairment related to turbines and generators - (16) 16 Interest income adjustment - California-related interest income (6) (16) 10 Gain on sale of non-marketable investment - ICE - 9 (9) Income tax expense - tax adjustments, net 202 109 93 (1) Revenues less purchased power, fuel and cost of gas sold. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Open EBITDA Reconciliations (Millions of Dollars) (Unaudited) Three Months Ended December 31, December 31, 2005 2004 Adjusted loss before interest and income taxes $(63) $(9) Adjusted depreciation and amortization 110 104 Adjusted EBITDA 47 95 Gains on sales of assets and emission allowances, net (52) (5) Historical wholesale hedges (included in wholesale gross margin): Power (closed) 47 - Fuel (28) (50) Tolling/other 186 10 205 (a) (40) (b) Open EBITDA $200 $50 Loss from continuing operations before income taxes $(255) (324) Adjustments: General and administrative adjustment - severance and restructuring - 4 Western states and Cornerstone settlements 8 - Interest income adjustment - California-related interest income - (3) Unrealized (gains)/losses on energy derivatives 86 138 Changes in California-related receivables and reserves - 33 Gain on sale of non-marketable investment - ICE - (9) Gains recorded prior to 2003 to be realized/collected in current period - 5 Adjusted depreciation and amortization 110 104 Adjusted interest expense, net 98 147 Adjusted EBITDA 47 95 Gains on sales of assets, net (52) (5) Historical wholesale hedges (included in wholesale gross margin): Power (closed) 47 - Fuel (28) (50) Tolling/other 186 10 205 (a) (40) (b) Open EBITDA $200 $50 (a) Open wholesale gross margin is $322 million ($117 million of adjusted wholesale gross margin excluding historical hedges of $205 million). (b) Open wholesale gross margin is $136 million ($176 million of adjusted wholesale gross margin excluding historical hedges of $(40) million). Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Open EBITDA Reconciliations (Millions of Dollars) (Unaudited) Twelve Months Ended December 31, 2005 Adjusted earnings before interest and income taxes $251 Depreciation and amortization 446 Adjusted EBITDA 697 Gains on sales of assets and emission allowances, net (168) Gain on sale of equity method investment (25) Historical wholesale hedges (included in wholesale gross margin): Power (closed) 441 Fuel (110) Tolling/other 84 415 (a) Open EBITDA $919 Loss from continuing operations before income taxes $(668) Adjustments: General and administrative adjustment - settlement of shareholder class action lawsuits 8 General and administrative adjustment - severance and restructuring - Western states and Cornerstone settlements 359 Interest income adjustment - California-related interest income (6) Unrealized (gains)/losses on energy derivatives 177 Changes in California-related receivables and reserves (1) Gain on sale of non-marketable investment - ICE - Gains recorded prior to 2003 to be realized/collected - in current period - Adjustment to October 2003 FERC settlement Gain on sale of counterparty claim - Accrual for payment to CenterPoint Energy, Inc. adjustment - Depreciation and amortization adjustment - accelerated depreciation on retired generation assets - Depreciation and amortization adjustment - equipment impairment related to turbines and generators - Depreciation and amortization 446 Adjusted interest expense, net 382 Adjusted EBITDA 697 Gains on sales of assets, net (168) Gain on sale of equity method investment (25) Historical wholesale hedges (included in wholesale gross margin): Power (closed) 441 Fuel (110) Tolling/other 84 415 (a) Open EBITDA $919 (a) Open wholesale gross margin is $1,193 million ($778 million of adjusted wholesale gross margin excluding historical hedges of $415 million). Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Diluted EPS from Continuing Operations Reconciliation (Dollars per diluted share) (Unaudited) Three Months Twelve Months Ended Ended December 31, December 31, 2005 2004 2005 2004 Diluted: Net Loss (per GAAP) $(0.52) $(0.88) $(1.17) $(0.10) Cumulative effect of accounting changes, net of tax - - - (0.02) (Income) loss from discontinued operations (0.16) 0.17 (0.37) (0.81) Loss from continuing operations (on GAAP basis) (0.68) (0.71) (1.54) (0.93) Adjustments: Gains recorded prior to 2003 to be realized/collected in current period - 0.01 - 0.04 Unrealized losses on energy derivatives 0.17 0.30 0.37 0.47 Changes in California-related receivables and reserves (including interest) - 0.06 (0.02) (0.02) Adjustment to October 2003 FERC settlement - - - 0.03 Severance and restructuring - - - 0.07 Restructuring costs associated with lease on corporate headquarters - - - 0.03 Settlement of shareholder class action lawsuits - - 0.02 - Western states and Cornerstone settlements 0.02 - 0.74 - Gain on sale of counterparty claim - - - (0.06) Accelerated depreciation on retired generation assets - - - 0.03 Equipment impairment related to turbines and generators - - - 0.03 Gain on sale of non-marketable investment - ICE - (0.02) - (0.02) Adjusted loss from continuing operations $(0.49) $(0.36) $(0.43) $(0.33) Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Thousands of Dollars) (Unaudited) December 31, December 31, 2005 2004 ASSETS Current Assets: Cash and cash equivalents $88,397 $105,054 Restricted cash 26,906 15,610 Accounts and notes receivable, principally customer, net 1,171,673 1,071,312 Inventory 299,099 245,682 Derivative assets 725,964 305,924 Margin deposits on energy trading and hedging activities 1,716,035 505,547 Other current assets 478,045 304,446 Current assets of discontinued operations 203,332 104,276 Total current assets 4,709,451 2,657,851 Property, Plant and Equipment, net 5,934,060 6,437,761 Other Assets: Goodwill 386,594 440,534 Other intangibles, net 510,582 540,583 Net California receivables subject to refund - 200,086 Equity investments 29,524 83,819 Derivative assets 527,799 272,254 Restricted cash - 25,547 Other long-term assets 565,000 502,830 Long-term assets of discontinued operations 880,796 1,032,759 Total other assets 2,900,295 3,098,412 Total Assets $13,543,806 $12,194,024 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt and short-term borrowings $789,325 $618,854 Accounts payable, principally trade 875,965 566,104 Derivative liabilities 1,219,954 401,881 Margin deposits on energy trading and hedging activities 15,588 19,040 Other current liabilities 402,942 463,528 Current liabilities of discontinued operations 96,456 29,184 Total current liabilities 3,400,230 2,098,591 Other Liabilities: Derivative liabilities 812,695 311,222 Other long-term liabilities 403,083 616,575 Long-term liabilities of discontinued operations 779,678 842,425 Total other liabilities 1,995,456 1,770,222 Long-term Debt 4,317,427 3,938,857 Commitments and Contingencies Total Stockholders' Equity 3,830,693 4,386,354 Total Liabilities and Stockholders' Equity $13,543,806 $12,194,024 Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Thousands of Dollars) (Unaudited) Twelve Months Ended December 31, 2005 2004 Cash Flows from Operating Activities: Net loss $(354,556) $(29,370) Income from discontinued operations (110,799) (239,800) Net loss from continuing operations and cumulative effect of accounting changes (465,355) (269,170) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Cumulative effect of accounting changes 608 (7,290) Depreciation and amortization 445,871 453,042 Deferred income taxes (228,992) (108,688) Net unrealized losses on energy derivatives 177,235 224,402 Amortization of deferred financing costs 15,110 77,881 Gains on sales of assets and emission allowances, net (168,114) (19,834) Western states and Cornerstone settlements 359,436 - (Income) loss of equity investments, net (25,458) 9,478 Other, net 27,498 (5,458) Changes in other assets and liabilities: Accounts and notes receivable and unbilled revenue, net (109,736) (59,723) Receivables facility proceeds, net - 232,000 Inventory (42,253) (14,744) Margin deposits on energy trading and hedging activities, net (1,213,940) (450,851) Net derivative assets and liabilities 10,978 12,547 Accounts payable 133,466 59,233 Payment to CenterPoint Energy, Inc. - (176,600) Other current assets 33,071 (37,399) Other assets (32,605) (5,562) Taxes payable/ receivable 3,053 47,652 Other current liabilities (34,479) 1,815 Other liabilities 4,495 42,617 Net cash provided by (used in) continuing operations from operating activities (1,110,111) 5,348 Net cash provided by discontinued operations from operating activities 192,948 100,165 Net cash provided by (used in) operating activities (917,163) 105,513 Cash Flows from Investing Activities: Capital expenditures (82,296) (159,671) Proceeds from sales of assets, net 149,345 11,325 Proceeds from sales of emission allowances 234,421 59,662 Purchases of emission allowances (145,769) (124,241) Restricted cash 14,251 178,885 Other, net 5,500 16,207 Net cash provided by (used in) continuing operations from investing activities 175,452 (17,833) Net cash provided by discontinued operations from investing activities 130,700 919,043 Net cash provided by investing activities 306,152 901,210 Cash Flows from Financing Activities: Proceeds from long-term debt 299,000 1,512,000 Payments of long-term debt (148,333) (1,597,568) Increase (decrease) in short-term borrowings and revolving credit facilities, net 407,000 (108,350) Proceeds from issuances of stock 37,885 24,618 Payments of financing costs (1,198) (71,884) Other, net - 9,156 Net cash provided by (used in) continuing operations from financing activities 594,354 (232,028) Net cash used in discontinued operations from financing activities - (815,885) Net cash provided by (used in) financing activities 594,354 (1,047,913) Net Change in Cash and Cash Equivalents (16,657) (41,190) Cash and Cash Equivalents at Beginning of Period 105,054 146,244 Cash and Cash Equivalents at End of Period $88,397 $105,054 Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Retail Operational Data (Unaudited) Retail Energy Revenues: Three Months Twelve Months Ended Ended December 31, December 31, 2005 2004 2005 2004 (in millions) (in millions) Retail energy revenues from end-use retail customers: Texas: Residential and small business $906 $766 $4,005 $3,531 Large commercial, industrial and governmental/institutional 588 521 2,185 1,957 Outside of Texas: Commercial, industrial and governmental/institutional 115 67 404 204 Total 1,609 1,354 6,594 5,692 Retail Energy revenues from resales of purchased power 121 133 474 374 and other hedging activities Market usage adjustments 6 (21) (23) (2) Total retail energy revenues $1,736 $1,466 $7,045 $6,064 Retail Energy Operating Data: Three Months Ended Twelve Months December 31, Ended December 31, 2005 2004 2005 2004 (gigawatt hours) (gigawatt hours) Electricity Sales to End-Use Retail Customers: Texas: Residential: Price-to-beat 3,606 3,958 17,981 19,315 Non price-to-beat 1,524 1,184 6,470 4,516 Total residential 5,130 5,142 24,451 23,831 Small business: Price-to-beat 1,208 1,495 5,183 7,166 Non price-to-beat 722 488 2,882 1,924 Total small business 1,930 1,983 8,065 9,090 Large commercial, industrial and governmental/ institutional (1) 6,488 7,889 28,604 31,278 Total Texas 13,548 15,014 61,120 64,199 Outside of Texas: Commercial, industrial and governmental/institutional 1,634 1,187 6,155 3,635 Total Outside of Texas 1,634 1,187 6,155 3,635 Total 15,182 16,201 67,275 67,834 December 31, December 31, 2005 2004 (in thousands, metered locations) Retail Customers: Texas: Residential: Price-to-beat 1,191 1,313 Non price-to-beat 483 334 Total residential 1,674 1,647 Small business: Price-to-beat 137 163 Non price-to-beat 66 30 Total small business 203 193 Large commercial, industrial and governmental/institutional (1) 34 40 Total Texas 1,911 1,880 Outside of Texas: Commercial, industrial and governmental/institutional 2 1 Total Outside of Texas 2 1 Total 1,913 1,881 Three Months Twelve Months Ended Ended December 31, December 31, 2005 2004 2005 2004 (in thousands, (in thousands, metered metered locations) locations) Weighted Average Retail Customer Count: Texas: Residential: Price-to-beat 1,194 1,326 1,250 1,360 Non price-to-beat 461 319 396 271 Total residential 1,655 1,645 1,646 1,631 Small business: Price-to-beat 137 165 147 174 Non price-to-beat 57 29 43 26 Total small business 194 194 190 200 Large commercial, industrial and governmental/institutional (1) 33 40 36 40 Total Texas 1,882 1,879 1,872 1,871 Outside of Texas: Commercial, industrial and governmental/institutional 2 1 2 1 Total Outside of Texas 2 1 2 1 Total 1,884 1,880 1,874 1,872 (1) These volumes include customers of the 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, 2004. Reliant Energy, Inc. and Subsidiaries Wholesale Operational Data (Unaudited) Wholesale Energy Gross Margin: Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 Change 2005 2004 Change (in millions) (in millions) West $40 $45 $(5) $176 $161 $15 PJM 66 86 (20) 384 440 (56) Southeast (3) 2 (5) 27 15 12 MISO 33 30 3 185 106 79 ERCOT 19 16 3 76 70 6 East gas transport (33) - (33) (29) (2) (27) West gas transport (4) (2) (2) (26) (7) (19) Other: Billings to Texas Genco for support costs - 1 (1) - 15 (15) Other (1) (2) 1 (15) (18) 3 Adjusted Plant Gross Margin 117 176 (59) 778 780 (2) California-related receivables and reserves - (33) 33 1 (11) 12 Adjustment to October 2003 FERC settlement - - - - (12) 12 Unrealized gains/losses on energy derivatives (1) 64 (9) 73 (108) 48 (156) Total Wholesale Energy Gross Margin $181 $134 $47 $671 $805 $(134) Wholesale Power Sales (2): Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 Change 2005 2004 Change (gigawatt hours) (gigawatt hours) Net power generation volumes 8,596 7,799 797 33,709 32,562 1,147 Power purchase volumes 736 278 458 1,838 1,840 (2) Power sales volumes 9,332 8,077 1,255 35,547 34,402 1,145 (1) Includes ineffectiveness and derivatives not designated as hedges. (2) These amounts include physically delivered volumes, hedge activity related to our power generation portfolio and volumes associated with our legacy trading activities. These amounts exclude (a) volumes associated with our discontinued operations, (b) generation from facilities where the generation is sold by a third party pursuant to a tolling agreement, (c) generation from facilities that are accounted for as an equity method investment and (d) physical transactions that are settled prior to delivery. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Net Generation Volumes (1) (2) (MWh) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, By region: 2005 2004 2005 2004 MISO 1,390,934 1,273,307 5,953,391 5,231,314 PJM 4,851,742 4,190,744 19,649,945 16,710,950 Southeast 275,180 363,836 1,907,348 2,198,244 West 1,134,179 2,006,245 5,653,446 7,437,753 ERCOT 1,310,296 1,284,026 5,241,421 5,468,668 Total 8,962,331 9,118,158 38,405,551 37,046,929 Three Months Ended Twelve Months Ended December 31, December 31, By asset type: 2005 2004 2005 2004 Base load 8,119,561 7,876,021 33,300,879 30,984,940 Intermediate 683,763 1,087,164 3,609,403 4,922,200 Peaking 159,007 154,973 1,495,269 1,139,789 Total 8,962,331 9,118,158 38,405,551 37,046,929 (1) These amounts exclude volumes associated with our discontinued operations. (2) These amounts include (a) physically delivered volumes, (b) hedge activity related to our power generation portfolio, (c) generation of 325 GWh and 682 GWh for the three months ended December 31, 2005 and 2004, respectively, and 3,647 GWh and 2,388 GWh for the twelve months ended December 31, 2005 and 2004, respectively, from facilities where the generation is sold by a third-party pursuant to a tolling agreement and (d) generation from facilities that are accounted for as an equity method investment. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries MISO Asset Summary (Unaudited) Summer/ Q4 net Winter Heat capacity Average Rate Q4 net generation factor (2) Capacity (MMBtu/ volume (1) (MWh) (MWh) Unit Name (MW) MWh) 2005 2004 2005 2004 Base Load Avon Lake 7 & 9 721 9.8 822,843 822,136 52% 52% New Castle 3-5 328 10.7 294,517 203,015 41% 28% Niles 1-2 208 10.5 273,740 247,749 60% 54% 1,257 1,391,100 1,272,900 50% 46% Peaking Avon Lake 10 24 17.4 (92) 462 0% 1% New Castle A-B 6 10.0 6 5 0% 0% Niles A 28 21.3 (80) (60) 0% 0% Shelby 1-8 356 9.8 - - 0% 0% 414 (166) 407 0% 0% MISO Total 1,671 1,390,934 1,273,307 38% 35% Summer/ Q4 YTD net Winter Heat capacity Average Rate Q4 YTD net generation factor (2) Unit Name Capacity (MMBtu/ volume (1) (MWh) (MWh) (MW) MWh) 2005 2004 2005 2004 Base Load Avon Lake 7 & 9 721 9.8 3,541,512 2,736,654 56% 43% New Castle 3-5 328 10.7 1,314,907 1,496,868 46% 52% Niles 1-2 208 10.5 1,015,015 985,666 56% 54% 1,257 5,871,434 5,219,188 53% 47% Peaking Avon Lake 10 24 17.4 918 2,940 0% 1% New Castle A-B 6 10.0 49 73 0% 0% Niles A 28 21.3 (7) (176) 0% 0% Shelby 1-8 356 9.8 80,997 9,289 3% 0% 414 81,957 12,126 2% 0% MISO Total 1,671 5,953,391 5,231,314 41% 36% (1) Represents net generation assets only. (2) Capacity factor is the ratio of the actual net electricity generated to the energy that could have been generated at continuous full-power operation during the period. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries PJM Asset Summary (Unaudited) Summer/ Q4 net Winter Heat capacity Average Rate Q4 net generation factor (2) Capacity (MMBtu/ volume (1) (MWh) (MWh) Unit Name (MW) MWh) 2005 2004 2005 2004 Base Load Conemaugh 1-2 (16%) 280 9.4 469,051 531,955 76% 86% Cheswick 1 580 10.0 796,127 893,680 62% 70% Deep Creek 1-2 (3) - - 8,409 0% 20% Elrama 1-4 465 11.3 571,907 394,107 56% 38% Keystone 1-2 (16%) 282 9.5 598,416 461,052 96% 74% Piney Station 1-3 (3) - - 16,679 0% 27% Portland 1&2 400 10.1 567,222 406,181 64% 46% Seward 1 520 9.7 525,477 472,936 46% 41% Shawville 1-4 566 10.3 846,928 796,249 68% 64% Titus 1-3 246 10.8 341,079 165,520 63% 30% 3,339 4,716,207 4,146,768 64% 55% Intermediate Brunot Island CCGT 293 9.8 3,038 (1,964) 0% 0% Gilbert CCGT 336 9.5 (830) 3,603 0% 0% Gilbert 9 168 11.1 6,350 (389) 2% 0% Hunterstown CCGT 839 7.0 93,786 16,602 5% 1% Portland 5 145 10.1 16,461 6,693 5% 2% 1,781 118,805 24,545 3% 1% Peaking Aurora 1-10 937 10.5 4,188 644 0% 0% Blossburg 1 23 14.6 1,442 638 3% 1% Brunot Island 1A-1C 54 13.6 (243) (63) 0% 0% Ceredo 1-6 (4) - 12.1 - 505 - 0% Gilbert 1-4 111 15.1 1,122 (32) 0% 0% Glen Gardner 1-8 184 14.6 1,550 (211) 0% 0% Hamilton 1 23 14.8 170 103 0% 0% Hunterstown 1-3 71 14.8 1,553 227 1% 0% Mountain 1-2 47 14.3 2,400 401 2% 0% Orrtanna 1 23 14.4 770 - 2% 0% Portland 3-4 40 15.1 413 149 0% 0% Sayreville A-D 264 13.8 1,089 12,249 0% 2% Shawnee 1 23 14.0 2 - 0% 0% Shawville 5-7 6 10.2 (19) (26) 0% 0% Tolna 1-2 47 14.2 169 143 0% 0% Titus 4-5 35 17.4 183 99 0% 0% Warren 3 (5) 68 12.8 (110) (114) 0% 0% Werner 1-4 252 13.8 2,031 4,564 0% 1% Keystone 3-6 2 10.3 6 142 0% 3% Conemaugh A-D 2 9.7 14 13 0% 0% 2,212 16,730 19,431 0% 0% PJM Total 7,332 4,851,742 4,190,744 30% 24% (1) Represents net generation assets only. (2) Capacity factor is the ratio of the actual net electricity generated to the energy that could have been generated at continuous full-power operation during the period. (3) Deep Creek 1-2 and Piney Station 1-3 were sold in April 2005. (4) Ceredo was sold in December 2005. Prior to January 1, 2005, Ceredo did not qualify for discontinued operations. (5) Warren 3 was mothballed in October 2004. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries PJM Asset Summary (Unaudited) Summer/ Q4 YTD net Winter Heat capacity Average Rate Q4 YTD net generation factor (2) Capacity (MMBtu/ volume (1) (MWh) (MWh) Unit Name (MW) MWh) 2005 2004 2005 2004 Base Load Conemaugh 1-2 (16%) 280 9.4 2,128,927 2,142,413 87% 87% Cheswick 1 580 10.0 2,889,720 3,174,840 57% 62% Deep Creek 1-2 (3) - 13,776 33,504 17% 20% Elrama 1-4 465 11.3 1,592,313 1,887,544 39% 46% Keystone 1-2 (16%) 282 9.5 2,245,923 2,047,909 91% 83% Piney Station 1-3 (3) - 28,569 75,851 23% 31% Portland 1&2 400 10.1 2,169,118 2,042,007 62% 58% Seward 1 520 9.7 2,774,658 472,936 61% 41% Shawville 1-4 566 10.3 3,198,870 3,119,613 65% 63% Titus 1-3 246 10.8 1,273,181 1,122,860 59% 52% 3,339 18,315,055 16,119,477 62% 59% Intermediate Brunot Island CCGT 293 9.8 8,037 3,229 0% 0% Gilbert CCGT 336 9.5 149,760 61,791 5% 2% Gilbert 9 168 11.1 20,653 11,542 1% 1% Hunterstown CCGT 839 7.0 721,781 283,944 10% 4% Sayreville 4-5 (4) - - - 388 0% 0% Portland 5 145 10.1 56,238 38,808 4% 3% 1,781 956,469 399,702 6% 3% Peaking Aurora 1-10 937 10.5 309,742 52,819 4% 1% Blossburg 1 23 14.6 4,274 1,982 2% 1% Brunot Island 1A-1C 54 13.6 (251) 2,417 0% 1% Ceredo 1-6 (5) - 12.1 - 1,550 - 0% Gilbert 1-4 111 15.1 3,428 1,044 0% 0% Glen Gardner 1-8 184 14.6 8,611 4,636 1% 0% Hamilton 1 23 14.8 1,434 2,774 1% 1% Hunterstown 1-3 71 14.8 8,005 11,674 1% 2% Mountain 1-2 47 14.3 8,214 3,084 2% 1% Orrtanna 1 23 14.4 2,368 1,551 1% 1% Portland 3-4 40 15.1 1,518 1,398 0% 0% Sayreville A-D 264 13.8 10,320 53,497 0% 2% Shawnee 1 23 14.0 262 259 0% 0% Shawville 5-7 6 10.2 (26) (74) 0% 0% Tolna 1-2 47 14.2 10,615 5,336 3% 1% Titus 4-5 35 17.4 798 195 0% 0% Wayne 1 (6) - - - 486 0% 0% Warren 3 (7) 68 12.8 (444) 1,029 0% 0% Werner 1-4 252 13.8 9,267 45,607 0% 2% Keystone 3-6 2 10.3 250 439 1% 2% Conemaugh A-D 2 9.7 36 68 0% 0% 2,212 378,421 191,771 2% 1% PJM Total 7,332 19,649,945 16,710,950 30% 26% (1) Represents net generation assets only. (2) Capacity factor is the ratio of the actual net electricity generated to the energy that could have been generated at continuous full-power operation during the period. (3) Deep Creek 1-2 and Piney Station 1-3 were sold in April 2005. (4) Sayreville 4-5 of 232 MW was retired in February 2004. (5) Ceredo was sold in December 2005. Prior to January 1, 2005, Ceredo did not qualify for discontinued operations. (6) Wayne 1 of 66 MW was retired in May 2004. (7) Warren 3 was mothballed in October 2004. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Southeast Asset Summary (Unaudited) Summer/ Q4 net Winter Heat capacity Average Rate Q4 net generation factor (2) Capacity (MMBtu/ volume (1) (MWh) (MWh) Unit Name (MW) MWh) 2005 2004 2005 2004 Base Load Sabine 54 10.0 21,033 70,320 18% 59% Intermediate Indian River 1-3 587 10.5 112,117 158,381 9% 12% Choctaw (3) 800 6.9 - - 0% 0% 1,387 112,117 158,381 4% 5% Peaking Osceola 1-3 470 11.0 64,219 56,842 6% 5% Shady Hills 474 10.8 48,988 62,396 5% 6% Vandolah 630 10.8 28,823 15,897 2% 1% 1,574 142,030 135,135 4% 4% Southeast Total 3,015 275,180 363,836 4% 5% Q4 YTD net capacity Q4 YTD net generation factor (2) volume (1) (MWh) (MWh) Unit Name 2005 2004 2005 2004 Base Load Sabine 54 10.0 215,273 338,739 46% 71% Intermediate Indian River 1-3 587 10.5 659,772 928,701 13% 18% Choctaw (3) 800 6.9 - (5,088) 0% 0% 1,387 659,772 923,613 5% 8% Peaking Osceola 1-3 470 11.0 410,868 410,597 10% 10% Shady Hills 474 10.8 331,611 345,283 8% 8% Vandolah 630 10.8 289,824 180,012 5% 3% 1,574 1,032,303 935,892 7% 7% Southeast Total 3,015 1,907,348 2,198,244 7% 8% (1) Represents net generation assets only. (2) Capacity factor is the ratio of the actual net electricity generated to the energy that could have been generated at continuous full-power operation during the period. (3) Choctaw was mothballed in May 2004. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries West Asset Summary (Unaudited) Summer/Winter Q4 net capacity Heat factor Average Rate (1) Q4 net generation (1) (3) Capacity (MMBtu/ volume (1) (2) (MWh) (MWh) Unit Name (1) (MW) MWh) 2005 2004 2005 2004 Base Load Bighorn CCGT (4) 598 7.2 680,925 597,785 52% 45% El Dorado (5) - 7.2 - 504,222 0% 98% 598 680,925 1,102,007 52% 60% Intermediate Coolwater 1-2 146 10.5 2,732 (265) 1% 0% Coolwater 3-4 462 10.0 87,087 118,409 9% 12% Etiwanda 3-4 640 10.0 227,429 8,309 16% 1% Mandalay 1-2 430 9.5 108,476 151,382 11% 16% Ormond Beach 1-2 1,516 9.6 27,117 626,403 1% 19% 3,194 452,841 904,238 6% 13% Peaking Ellwood 54 13.3 225 - 0% 0% Mandalay 3 130 15.8 188 - 0% 0% 184 413 - 0% 0% West Total 3,976 1,134,179 2,006,245 13% 22% Q4 YTD net capacity factor Q4 YTD net generation (1) (3) volume (1) (2) (MWh) (MWh) Unit Name 2005 2004 2005 2004 Base Load Bighorn CCGT (4) 598 7.2 2,946,536 2,337,758 56% 49% El Dorado (5) - 7.2 711,160 1,501,110 70% 73% 598 3,657,696 3,838,868 61% 62% Intermediate Coolwater 1-2 146 10.5 29,273 17,878 2% 1% Coolwater 3-4 462 10.0 364,894 448,872 9% 11% Etiwanda 3-4 640 10.0 725,252 212,821 13% 4% Mandalay 1-2 430 9.5 349,027 670,671 9% 18% Ormond Beach 1-2 1,516 9.6 524,716 2,248,643 4% 17% 3,194 1,993,162 3,598,885 7% 13% Peaking Ellwood 54 13.3 1,083 - 0% 0% Mandalay 3 130 15.8 1,505 - 0% 0% 184 2,588 - 0% 0% West Total 3,976 5,653,446 7,437,753 14% 21% (1) Excludes Etiwanda 5 of 118 MW, which was retired in January 2004. Q4 YTD 2005 includes net generation from Ellwood and Mandalay 3 although the units were mothballed in November 2003 and not officially returned to service until April 2005. The net generation from Mandalay 3 and Ellwood was produced during the re-commissioning. Etiwanda 3 and 4 were also mothballed in November 2003 and returned to service in September 2004 and July 2004, respectively, under a reliability-must-run contract with the California Independent System Operator through the end of 2004. (2) Represents net generation assets only. (3) Capacity factor is the ratio of the actual net electricity generated to the energy that could have been generated at continuous full-power operation during the period. (4) Bighorn CCGT began operations in February 2004. (5) Sold our El Dorado investment in July 2005. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries ERCOT Asset Summary (Unaudited) Summer/ Q4 net Winter Heat capacity Average Rate Q4 net generation factor (2) Capacity (MMBtu/ volume (1) (MWh) (MWh) Unit Name (MW) MWh) 2005 2004 2005 2004 Base Load Channelview 830 6.1 1,310,296 1,245,954 71% 68% Landfill Gas (3) - 10.5 - 38,072 0% 66% ERCOT Total 830 1,310,296 1,284,026 71% 68% Q4 YTD net capacity Q4 YTD net generation factor (2) volume (1) (MWh) (MWh) Unit Name 2005 2004 2005 2004 Base Load Channelview 830 6.1 5,159,871 5,318,253 71% 73% Landfill Gas (3) - 10.5 81,550 150,415 48% 66% ERCOT Total 830 5,241,421 5,468,668 70% 73% (1) Represents net generation assets only. (2) Capacity factor is the ratio of the actual net electricity generated to the energy that could have been generated at continuous full-power operation during the period. (3) Landfill Gas assets were sold in July 2005. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004. Reliant Energy, Inc. and Subsidiaries Adjusted Net Debt - to - Adjusted EBITDA Ratio (in millions, except ratio) (Unaudited) December 31, 2005 Debt: Senior secured revolver $383 Senior secured term loans 552 (1)(2) Senior secured notes 1,850 Convertible senior subordinated notes 275 Orion Power 12% notes (3) 448 PEDFA fixed-rate bonds for Seward plant due 2036 500 Channelview 348 Receivables facility 450 Warrants (1) Other (4) 1 REMA operating leases (off-balance sheet) 497 (5) Total debt and debt equivalents (6) 5,303 Less: Cash and cash equivalents (88) Restricted cash (27) Net margin deposits (1,700) Adjusted Net Debt $3,488 Adjusted EBIT $251 (7) Adjusted depreciation and amortization 446 (7) Adjusted EBITDA 697 (7) (8) REMA lease expense 60 (5) (7) Total Adjusted EBITDA $757 (7) (8) Ratio 4.6 (1) Excludes $638 million of debt related to NYC Discontinued Operations. (2) Excludes an additional $300 million related to expected net cash proceeds from the sale of our NYC assets, as we have agreed to utilize all of the net unrestricted proceeds from the sale to pay down debt. (3) Orion 12% notes includes purchase accounting adjustments of $48 million. (4) Other subsidiary debt. (5) For purposes of computing this ratio, the effects of these off-balance sheet items are included. (6) Debt equivalents include off-balance sheet REMA lease of $497 million. (7) Represents amounts for the rolling four quarters ended December 31, 2005. (8) Excludes Discontinued Operations: (a) NYC adjusted EBITDA of $10 million, which includes $239 million loss on disposition, and (b) Ceredo adjusted EBITDA of $(27) million, which includes $27 million loss on disposition and (c) European Energy adjusted EBITDA of $52 million. Reference is made to Reliant Energy, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2004.

FCMN Contact: dbarber@reliant.com